Fed Pursues Crony Capitalism
By DICK MORRIS
Published on
TheHill.com
on July 23, 2013
How can Federal Reserve Chairman Ben Bernanke justify his decision to
approve another round of "quantitative easing" by citing the lack of an
assured recovery in the U.S. economy?
How can he pretend that his decisions to continue or discontinue the
wholesale printing of money and to maintain or end interest rates near
zero percent have anything to do with unemployment or the inflation
rate?
The obvious fact is this third round of quantitative easing (QE3), which
has been going on for nearly a year now, is not filtering down into the
mainstream economy. Whether or not other forms of trickle down work,
this one sure doesn't. The quantitative easing has done nothing to
increase the anemic growth rate that remains mired in the 1-2 percent
range despite the printing of as much as $85 billion each month. The
flow of newly minted money goes directly into the top echelons of our
financial establishment -- banks and brokerage houses -- as the nation's
richest executives use the funds to pay for their gambling habits in
stocks and derivative bets.
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Crony capitalism has taken over the government. The Fed prints the
money. Then it gives it away for no interest and in exchange for
moribund mortgage-backed securities. The recipients gamble the night
away playing the stock market and the $1.4 quadrillion derivative
market, content in the assurance that if they fail, the feds will
guarantee them and prop them back up. Too big to fail covers their
downside risk. Free money encourages their upside gambling.
Record bank profits amid a stalled economy attest to this ongoing
misdistribution of resources. Crony capitalism and big government
advance in tandem, making the very rich much richer and leaving the rest
of the economy in dismal shape.
The stock market -- recipient of the funny money -- has investors
hypnotized. They pay no attention to the near-zero economic growth rate
or the miniscule job-creation numbers, instead focusing on the dizzying
heights as the Dow sets daily records. But the Olympian levels are
themselves artificial, impelled by quantitative easing, which puts free
money in the hands of the banks and brokerages that they can invest in
the market as they wish. At some point soon, they will tire of the game
and pull their money out. And the market will crash.
Quantitative easing increasingly resembles the foreign aid program. The
U.S. taxpayer sends tens of billions of dollars overseas in the
idealistic expectation that the money will alleviate poverty and
suffering in the third world. Instead, dictators and petty tyrants
pocket the money and send it abroad to their Swiss bank accounts for
safe keeping, all the while pleading for more aid to their countries'
poor.
When Bernanke says he will end QE3 when the unemployment rate drops to
6.5 percent or inflation rises above 2 percent, he is citing ridiculous
and irrelevant yardsticks.
The only way unemployment is going to drop in an economy as moribund as
ours is if a sufficient number of us are persuaded to give up looking
for work and drop out of the labor force as a result. The inflation rate
will likely remain comfortably below 2 percent as long as you continue
to exclude food and fuel from its calculation, the two most
inflation-sensitive aspects of our consumer spending.
Of course, Bernanke is not limited by these statistics. He is limited
only by the greed of his cronies, so QE3 will continue on and on.
Special:
What the
Bible Says About Investing (Shocking)
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