Monday, December 12, 2005

 

Fed Nominee Doesn't Understand Booms/Busts

Bill Fleckenstein has an editorial on the Fed nominee. "A recent profile of the incoming Fed chairman reveals his lack of real-world experience and an arrogant confidence the economy can be managed. Anyone with even an ounce of common sense, and a similar degree of familiarity with the Depression, will quickly see that Bernanke has no comprehension of the fact that booms and busts are related. More than related. To a degree, honest people can argue how much, booms cause busts. They don't just precede them. Booms derange prices and therefore misdirect investment."

"Bernanke says that the Fed should never prick a bubble but only clean up the mess afterward. I disagree with him there, too, but this Fed doesn't just stand around watching bubbles inflate. It's inflating them, both with its monetary policy and with its tonsils. Bernanke's tenure will prove this in spades as the residue from the prior stock mania and fallout from the leveraged-housing bubble cave in on him."

"My friend's take was so succinct and spot-on..here it is: 'What his comments..typify is Bernanke's own brand of orthodoxy, at the root of which is an arrogant belief that a central bank can lead a market economy around by the nose.'"

"'For Bernanke, booms have nothing to do with busts. The common-sense theorists of the so-called Austrian School might as well never have been born. So, on top of the arrogance of the central economic planner, add the arrogance of the cock-sure college professor. The gold price isn't going up for nothing.'"

Comments:
Okay, Okay,
I see yu guys are on to something especially when you adjust for inflation. I have never invested in gold other than having coins. Is there a better way?
 
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