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Source link: http://archive.mises.org/12292/the-fed-as-a-confidence-game/

The Fed as a Confidence Game

March 24, 2010 by

Printing up money and lowering the value of all dollar-denominated assets while simultaneously benefiting political friends and accomplices is surely a fraud that could be classified as a confidence game. FULL ARTICLE by Mark Thornton

{ 5 comments }

Den March 24, 2010 at 12:14 pm

I wonder why nobody published here a very good story by Jack London. It tells everything about the nature of paper money, its goal and outcome. It’s one of my favorite of the author. The fact that London was a socialist just make it more funny. And guys, what an end it has! Let your FRS and our CBRF perish the same way!

Dick Fox March 24, 2010 at 1:26 pm

Mark,

I didn’t catch this when you presented it at Jekyll Island but Fred Mishkin gave one of the strongest arguments against the FED that I have ever heard.

Mishkin wrote:

If the central bank has no informational advantage, and if it knows that a bubble has developed, the market will know this too, and the bubble will burst. Thus, any bubble that could be identified with certainty by the central bank would be unlikely ever to develop much further.

If the market knows as much as the FED and acts on it and since it is unlikely anything will develop from it then there is no reason for the FED. The market will solve it all.

george March 24, 2010 at 10:01 pm

I wouldn’t blame the Fed…

The Fed (“We control inflation and print money”) are the good cop in the good cop/bad cop scheme run by Congress.

Congress threatens to spend/print too much and the Fed is the restraining influence (and does the direct printing).

Congress created the Fed and if enough of Congress agreed they could uncreate them. However, for now, Congress is too interested in spending money they don’t have and will do anything to avoid having to end their spending.

We’ve seen in the huge bailouts a sample of what Congress can be moved to do when it’s source of funds is threatened. I’d guess we will see more…

Patrick Barron March 30, 2010 at 11:58 am

There are several possible reasons that the Fed consistently lies to the people, including Congress. For one thing, no one gets appointed to any position in the Fed (or government in general) unless he is seen as an interventionist, because that is what government is all about–intervention. Two, once in office there is tremendous pressure to be one of the guys and to defend one’s job…this is the Jacksonian definition of corruption. Three, there is the implicit understanding that one has an obligation to show confidence at all times, sort of like a parent telling his sick child that all will be well. Or better yet, as one combat Marine attempts to show confidence that a mortally wounded comrad will be OK. I just read E. B. Sledge’s “With the Old Breed” about his experience as a combat infrantryman in the Pacific in WWII. Sledge admits that this display of false hope was seen as humane and an obligation to one’s fellows. Mark hits the nail on the head in his opening paragraph when he says that we should disregard anything that the Fed says.

oyun June 8, 2010 at 10:24 pm

thanks man!

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