It's getting serious for the academic hacks who meet every two months in Basel to drink $5000 bottles of wine and regale each other with their stupidity, most of whom have never held a job outside of academia, and for whom the only solution to the second great global depression is simply to buy assets and specifically stocks in a bid to restore confidence, oblivious that everyone now understands that the greater the central bank intervention, the greater the confidence destruction.
So serious, in fact, that the Fed is now on the defensive not only from tinfoil bloggers who said QE would ultimately lead to war, revolution, and global catastrophe, but
- very serious people who say QE will "Permanently Impair Living Standards For Generations To Come"
- other very serious people who are asking whether "was QE worth it?"
- even more serious people (and self-made billionaires) who observe that the Fed is "Destroying the Value Of Money" And "Uprooting The Basic Stability Of Society"
- other billionaires who note that "It's Tempting To Invest, But This Will End Very Badly"
- its supervsiors who accurately point out that "The Solution To Bubbles Is Not More Bubbles, It Is Avoiding Bubbles In The First Place"
- and of course, Paul Tudor Jones who repeated what we said 6 years previously when he said that the "Disastrous Market Mania" Will End In "Revolution, Taxes, Or War"
In fact, the only people who defend the Fed now are socialists who believe in Magic Money Trees, other career academics, E-trade babies who believe that BTFD and BTFATH is what investing is about, and of course, various sycophants and drama majors posing as financial journalists.
Meanwhile, in an attempt to cover up his criminal actions and exonerate his genocidal stupidity which will result in global conflict, revolution and/or war, the man responsible for the final Fed Bubble, Ben Bernanke, has taken on blogging.
Luckily there are many who have taken him to task, including the man who first compared Fed policy to eating jelly donuts, David Einhorn, and who during last week's Grant's Invesstment Conference, had this to say about the most disturbing thing written recently by Bernanke:
This is what Einhorn had to say:
In a recent blog post, Mr. Bernanke wrote: “the best way to improve the returns attainable by savers was to do what the Fed actually did: keep rates low, so that the economy could recover and more quickly reach the point of producing healthier investment returns.”
This is circular reasoning: He is assuming that which he seeks to prove, namely that ultralow rates actually help the economy. But, that is the open question.
Then again, by now it should be clear to everyone that Bernanke really is a very confused person whose only job was to preserve the illustion of confidnece while destroying the middle class, and making the banks and the 0.01% ultra wealthy (and if it isn't read this).
Which is why it was Einhorn's other observations from the confernce that were note worthy. Here are some select excerpts:
- I last spoke here three years ago and talked about what I dubbed the Fed’s Jelly Donut monetary policy. I observed that accommodative policy has diminishing returns that had long?since passed the point of being productive and was now actually slowing the recovery. I compared it to eating a 36th Jelly Donut.
- By keeping rates too low, the Fed sought to create a stock market wealth effect. I suggested that while this would increase income inequality, the wealth effect would not likely translate to enough additional consumption to offset the even bigger drain from lost income to savers.
- Policy makers and mainstream economists are stuck in GroupThink that easy money always helps the economy, despite basic economic principles that suggest diminishing or negative marginal returns.
- Swiss Re recently calculated that from 2008?2013, U.S. households lost $470 billion of income due to excessively low interest rates. Because savers perceive interest income as more recurring than volatile stock market gains, and because interest income is spread more broadly than equity gains, it’s fair to assume that a much greater proportion of interest income would be spent.
- Low interest rates make workers save more, as they can’t anticipate earning safe income on savings. They also make retirees spend less, as they have less current and future income and need to stretch savings over their remaining lives. Both dynamics create less spending and a slower recovery.
- The question is who benefits from the harm to savers? Of course, it is governments who are able to borrow more cheaply.
- I remain of the view that higher rates will surprise by improving the economy on Main Street even though it is quite possible they would create some turbulence on Wall Street, as most equities are now highly priced and a select group are in a bubble.
There is more in the presentation whose selected slides we have shown below, but here is the punchline:
We have passed the point where Jelly Donut policy is merely slowing the recovery. Distortions are now adding risk to the banking and insurance markets and leading to poor incentives for the largest players in the financial system.
Monetary policy and regulations have combined like a failed chemistry experiment to create a potentially destructive force that should not exist outside of fiction.
I think this adds to the ultimate attraction of holding gold instead of green.
We couldn't agree more.