Comments on: Depression risk might force U.S. to buy assets

By: Dennis

Dennis — Wed, 16 Apr 2008 12:20:22 +0000

“Over the years, all early restraints on Fed activities or its issuing of credit have been lifted; indeed, since 1980, the Federal Reserve has enjoyed the absolute power to do literally anything it wants: to buy not only U.S. government securities but any asset whatever, and to buy as many assets and to inflate credit as much as it pleases. There are no restraints left on the Federal Reserve.â€

Given the 1980 date cited by Rothbard, I am assuming he is referring to the Monetary Control Act of 1980.

By: Daltica

Daltica — Sat, 16 Feb 2008 16:46:58 +0000

This is exactly what the Contrarian Investors' Journal says in Recipe for hyperinflation. The more the Fed tries to fight deflation, the more likely hyperinflation will be the outcome!

By: Dennis

Dennis — Fri, 15 Feb 2008 14:05:25 +0000

I think I found the answer to my question.

According to Jerome F. Smith on page 37 of his 1980 book, The Coming Currency Collapse: “Under the Monetary Control act of 1980 the Fed is empowered to reduce reserve requirements still further and, for the first time, is further empowered to purchase and monetize debt securities issued by private corporations, banks, municipalities, states, etc.â€

However, I do not know if this law was subsequently repealed or modified.

By: billwald

billwald — Fri, 15 Feb 2008 05:44:48 +0000

The government has the most computer power in the world and is planning to build the biggest machine in the world for spying on us. If it was reconfigured for technical trading the Fed could end up owning the whole world.

By: eric lansing

eric lansing — Fri, 15 Feb 2008 05:44:03 +0000

didn’t Japan try this to no avail?

and if the US tried this, they better hope that Americans and the rest of the world continue to use dollars to settle transactions.

By: Jake

Jake — Fri, 15 Feb 2008 04:37:56 +0000

Ha Ha…Interesting. I commented on the same two articles on my blog. Glad to see I’m on the same wavelength as the clever people at Mises.

I’m still a novice armchair Austrian Economist. Maybe someone can critisize what I wrote to see if I’m on track to become a fully fledged Austrian Economist?

http://freethemarketman.blogspot.com/2008/02/whore-of-world.html

http://freethemarketman.blogspot.com/2008/02/how-to-socialise-risk.html

By: Dennis

Dennis — Fri, 15 Feb 2008 02:42:01 +0000

Robert,

I seem to recall reading years ago that back in the very late 1970s or in 1980, Congress gave the Fed authority to purchase a wide variety of assets. As is often the case, the law had some type of Orwellian title, which I do not recall.

Maybe I am mistaken, or the law was subsequently repealed or modified. Can you or anyone else help clarify this issue?

By: TLWP Sam

TLWP Sam — Thu, 14 Feb 2008 17:18:27 +0000

Was the 1987 stock market crash one real-world test of the modern economy? If the 1987 crash didn’t do much was it because the costs were socialised with cash injections from the Government? If so, then depressions are associated with the gold standard because under a gold standard the costs can’t be socialised through inflation. Therefore is it unsurprising that many economic conservatives see downturns as ‘economic hangovers’ and it’s good if those who didn’t get involved in the bubble and prepare for the bust don’t get burnt?

By: Taylor

Taylor — Thu, 14 Feb 2008 16:13:22 +0000

G-Men on the boards of major US corporations?

Hahaha! Well, just more baby steps towards outright totalitarian fascism, not that the system isn’t already incredibly fascistic as it is.

George Reisman talked about how dangerous it would be to have the government buying up large tracts of major US corporations when he was criticizing some Social Security reform plans which would have the government invest SS money into the stock market to earn a higher return on the money.

I wonder how long it will take people to realize that THEY’RE paying for the higher asset/stock prices that the Fed is “financing” with THEIR tax money?!