Wednesday, January 16, 2008
Posted by:
John Campbell
at
2:00 PM
I just got off the air on CNBC Powerlunch. I discussed my expectations for Chairman Bernancke’s testimony tomorrow at the budget hearing. Click below to view the video.
Time to deal with the hangover.
Advice to the Fed:
1. Stop debasing our currency.
2. Tighten interest rates.
3. Allow the malinvestments to liquidate and the market to adjust.
4. Resist the political temptation to cut rates.
5. Stop trying to reinflate the real estate bubble. It burst. Let it go.
Advice to the Congress:
1. Stop taxing productivity and savings. Start taxing CONSUMPTION via the Fair Tax.
2. Resist the notion that the government can, should or has the legitimate constitutional authority to meddle in the housing meltdown. Let it go.
3. Fiscal stimulus is inflationary. STOP THE INSANITY. That's what got us into this mess. More alcohol for the drunks will not help. Tax cuts may soothe the electorate, but they will only exacerbate the problem.
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With your annoying appeals to logic, mathematics and history.
Seriously, though: amen, with one addendum to you congressional advise list:
4. Pass legislation to repeal all legal tender laws. Just as peaceful, productive adults require no political aid in selecting what clothes to buy or cars to drive, they are perfectly able to select a currency (or currencies) that imparts sufficient liquidity and stable purchasing power. Granted, this will transfer power and wealth from State to citizen, but the political class lives to serve, no?
Today's money (which is to say, monopolized, interest-bearing, fiat debt) explosion trumpets the APPEARANCE of a solution but, due to its perfidious nature, will in fact induce malinvestment, burst bubbles, desparation and finally, surrender of individual sovereignty to the government in exchange for temporary reprieve. Then the process will repeat in a few years. Oh, and unsustainable welfare and warfare the whole time. |
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A person who keeps doing the same thing and expects different results is one of the definitions of mental illness.
It was "cheap money", via the Fed lowering interest rates, that greased the skids of the sub-prime mortgage bubble and led to speculative housing prices. Greed then pulled this sled of cheap money through the banks and streets of America. The concept that the constant lowering of interest rates is the solution to this problem, is the very thinking that is making things worse. The Fed should have stood pat in 2003. |
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