Pump Pump Pump

The title was Matt Drudge’s headline this morning, with a picture of Fed Chairman Bernanke. There should also be pictures of Mario Draghi, the ECB Chairman and Haruhiko Kuroda of the Bank of Japan. All are printing money at staggering rates, creating a variety of speculative bubbles while failing to achieve their stated goal, that of revitalizing their failing economies by creating inflation. They do not, apparently, understand that it is their actions, in large part, that are causing the economies to fail. They are destroying faith in the monetary system – just look at the surge in popularity of “bitcoins,” to say nothing of the rush of people to buy precious metals even in the face of a steady decline in their value. Sadly, even the housing bubble is back in many parts of the country and of course other countries, especially Canada and Australia, have yet to feel the consequences of their housing bubbles. Indicators of business activity around the wolrd have lost momentum and in most cases have relapsed into decline. It never seems to occur to “economists” that when you take a policy action and bad consequences ensue that maybe doing more of the same is not the best idea.

We’ve had two violent economic oscillations as a result of central bank monetary bubbles and we’re about to embark on the next cycle, which I expect will be much more violent than the previous one, which in turn was worse than the first. It is long past time for the pumpers to back off and let the economy find its own way. If they don’t it will eventually spin out of control anyway, regardless of their actions, as a result of catastrophic failure of the financial system.

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