From the Mises Economics Blog:
…[When] Ben Bernanke was questioned in 2005 about a home price bubble, he answered,
“Well, I guess I don’t buy your premise. It’s a pretty unlikely
possibility. We’ve never had a decline in house prices on a nationwide basis. So what I think is more likely is that house prices will slow, maybe stabilize: might slow consumption spending a bit. I don’t think it’s going to drive the economy too far from its full employment path, though.”
Yes, the man who’s every action sends shock waves through the global economy was, and is, clueless about how an economy actually operates. When he’s not spending his time misunderstanding economic activity and history, he takes to outright lying. In a recent interview on 60 Minutes, he said the Federal Reserve was not pursuing an inflationist monetary policy, or printing money as it is known. While technically true that the Fed isn’t printing money per se, the consequences of its actions are similar. Through the magic (fraud) of the fractional-reserve banking system and its corollary multiplier effect, every dollar injected into the banking system (generally through the purchase of bonds generally from privileged banks like Goldman Sachs) by the Federal Reserve increases the money in circulation if/when it is loaned out by banks. So while technically they don’t print the money, they do purchase things by simply adding zeros to a computer account. This has virtually the same effect as inflation, or the printing of physical money and it isn’t even the only way the Fed increases the money supply without actually printing physical dollar bills. In this way, the government doesn’t need to raise taxes, cut spending or balance their budget. They have figured out how to revoke the immutable laws of economics. Up is down, black is white.
In a sparsely populated place I call reality, printing money (or adding zeros to a digital account) to fuel endless government spending and Wall Street profligacy has consequences. We are already witnessing some of the milder consequences following the Federal Reserve’s false boom, with high unemployment, price inflation and a smattering of civil unrest across the world just a few examples. They are, of course, all interconnected. However, if/when the destruction of the dollar is complete, we may look back fondly on our current predicament and wish we had altered course when we had the chance. Hindsight can be a cruel mistress.