An Intentional Ponzi Scheme Ends Where? Hmmm…

This is the first time I have seen a direct admission of the FED TRYING to create a bubble on PURPOSE.

Crazy times.

6 thoughts on “An Intentional Ponzi Scheme Ends Where? Hmmm…

  1. Mr. PragCap seems to overlook the longer Fed history, traceable even to its informal origins nearer to 1898 than to 1998 – presumably explaining his indignation.
    Nice that he highlighted an actual statement of the game from an official, though.
    Kings clipped coins of the realm for the gold.
    Democracies produce political candidates who promise us, voters, “free” stuff which the gov’t, at any given moment, can’t actually pay for.
    Therefore, an “impartial/apolitical” central bank has to be established, to create non-existent money to give to the now-elected politicians, via buying Treasury bonds, aka “quantitative easing.”
    And we elect them!

  2. Michael:
    What would you do? It’s always easy (and right) to criticize… but what is your ‘solution’… let’s suppose you were the Fed… please tell all the readers (well… they are all biased)… but please… tell.


  3. I caught an interview of former US Treasury Secretary John Snow on Oct 11. The reporter was asking Snow about the anticipated effect of Quantitative Easing II. I suspect that QE I caused the stock market rally seen during that time, and it looks like QE II is fueling the current rally. It is the first time I personally saw a senior official (or ex-official) admit to the pump-and-dump.

    Here is the meat of the interview:

    Washington bureau chief Darren Gersh talked with Snow and began by asking why the Fed is considering this unusual step. JOHN SNOW, FORMER TREASURY SECRETARY: Well, the U.S. economy is way, way under performing. We have slow growth. We have high unemployment, we have output levels that are far short of our potential output levels. And we have just come through the biggest financial catastrophe, cataclysmic event of the last 70 years. So the Fed`s worried about, properly so, about the future path of the U.S. economy and quantitative easing. In simple terms, it`s simply the Fed`s applying more credit to the markets by buying paper of one kind or another.

    DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: And will it work? What specifically does the Fed want to do and will it work?

    SNOW: Well, what the Fed wants to do is to get the economy on a better growth path. The idea behind quantitative easing is you buy paper, government paper that`s now held by financial institutions or individuals. And then they have the money. And then they go out and buy some other financial assets, stocks. And they drive up the value of those other financial assets so we get an increase in the value of financial assets which means an increase in the value of lots of peoples` household wealth. And the idea is if household wealth goes up, then that will be a spur to spending.

    GERSH: But if people are afraid to spend, will giving them more money solve that problem?

    SNOW: If their assets go up in value, if the stocks and bonds they hold go up in value, they will be inclined to feel wealthier and more confident about the world. That`s the theory.

    If you are so inclined, you can see the actual video here.

    Queue up to about 6:41 into the video: Nightly Business Report for Oct 11, 2010.

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