First, thank-you to Mr. Doug French. Great article, but quite depressing, if sobering. Sometimes it is true, “Reality Bites”.

Most especially whenever a nation’s central bank pins its hopes on Keynesian “theory” and thus underpins its policies on bizarre monetary hi-jinks and “stimulation”.

As you point out, the Real Estate, Finance, Insurance, and Banking Sectors, and also the Architecture and Engineering sectors, have all joined the larger group of ‘regular’ Americans who are victims of The FED’s overly-stimulative policies of 2001—2008 just as an earlier Roaring 20-s Generation was the victim of Ben Strong’s FED policies (“coup de whiskey”) during the 1920-s. Will our Ben Bernanke replay the tragedy of that earlier Ben’s mistakes? Just WHY does the central bank continue to create unsustainable, and ultimately tragic, economic bubbles? These bubbles are a mirage. No long-lasting jobs can come of them. Then WHY?

From Doug Noland’s recent article:

The collapse in confidence was the consequence of cumulative (“Roaring Twenties”) financial and economic excess. It was recognized at the time that the Fed had steered badly off course; had succumbed to “New Era” thinking; and had abrogated its responsibility for maintaining stable Credit. The powerful president of the New York Fed, Benjamin Strong, was faulted for his predilection for intervening in support of the markets, while turning a blind eye to speculative excess and Bubble Dynamics.

From “Reliving the Crash of ’29: How Hoover’s Policies Blazed the Trail for FDR and Wrecked the US Economy” at http://www.lewrockwell.com/rothbard/rothbard96.html

One point is undisputed: The autocratic ruler of the Federal Reserve System, from its inception in 1914 to his death in 1928, was Benjamin Strong, a New York banker who had been named governor of the Federal Reserve Bank of New York. Strong consistently and repeatedly used his power to force an inflationary increase of money and bank credit in the American economy, thereby driving prices higher than they would have been and stimulating disastrous booms in the stock and real estate markets. In 1927, Strong gaily told a French central banker that he was going to give “a little coup de whiskey to the stock market.” What was the point? Why did Strong pursue a policy that now can seem only heedless, dangerous, and recklessly extravagant?

To hayeksheroes, yes it is true that an academic education can have many benefits, including in your case, learning about The School of Austrian Economics, and hopefully including the possibility of becoming a successful entrepreneur.

But there is a problem. It’s going to take a long time for this so-called Recovery to happen. And in hopes of making that recovery happen, The FED is once again doing everything it can to create another bubble — but it will not work, other than to eventually cause an implosion in the entire Economy.

We are creating delusionary thinking in a whole generation of college students who have put their faith in the Bubble Blowers at The FED. Talk about “Malinvestment”. This generation’s mantra will be “My entire education was one big Malinvestment!”

From Doug Noland at http://www.prudentbear.com/index.php/creditbubblebulletinview?art_id=10531

We need rules to ensure that Federal Reserve policymaking does not dictate the (re)distribution of wealth throughout our society. We need rules that would ensure that the public and financial markets do not expect too much from monetary policy. We need rules that would forbid the Fed from monetizing debt, ballooning its holdings, and massively inflating system liquidity – at its discretion. Rules are needed to ensure that monetary policy doesn’t dictate decision-making throughout the entire economy.

And we so need a framework of rules that would work toward ensuring that the stability of our monetary system is beyond repute – that society need not fear that policymakers will devalue their savings or jeopardize the Creditworthiness of our nation’s obligations and financial system. And we need rules to ensure that the ideology of a single appointed central banker cannot have a profound impact on the nature of monetary policy, asset prices, debt structures, speculative dynamics, financial flows and resource allocation. The risks of indiscretion are much too great, and Henry Simons was absolutely right.

And for good measure here is Charlie Munger suggesting that the entire Banking Sector should be downsized by 80%. He also recognizes the artificial nature of the size that this sector was puffed up into, via The FED’s artificial manipulation of the Money System.

Just exactly where do we think ALL of the finance graduates are going to productively go upon graduation?

http://money.cnn.com/video/news/2011/05/01/n_charlie_munger_banks.cnnmoney/