E Pros And Cons Of Attacking The Federal Reserve Bank
It would seem that the attacks on the Fed are increasing. Most people have lots of reasons, legitimate reasons, for attacking the Fed. Now, a presidential candidate, Donald Trump, has chimed in with his improper attacks on the Fed.
Trump is partly right, as most people who are all things to all people appear to be right. But his attacks require multiple universes. We, unfortunately, live in only one universe and are relegated to the earth, home of Hotel Structured Finance, where we have all checked in.
But more about all that in the cons.Here are the pros first.
So, what are the pros of attacking the Fed? Well, I have attacked the Fed on five issues:
First is the issue of mispricing risk. I think it is proven that the Fed mispriced risk in the housing bubble and in other markets as well, causing banks and other financial institutions to buy unsafe bonds that were less than sound, putting the economy in jeopardy.
Second is the issue of taking down the economy in the Great Recession. I believe that the Fed took down the economy to slow wage growth and get houses back for the uber rich. The Fed would say it was just all to protect the banks. Maybe that is why so many people hate banks.
So, the housing crash was bad, but the resulting tightening of credit, mark to market, etc, made things much worse for main street. The Fed made things so bad that companies could not borrow, sending many workers to a life of misery, unemployment, and even death, with most of the unemployed having little opportunity to rebound for years.
Third is the issue of creating fairness in society. I have advocated helicopter money because all other stimulus from the Fed goes to making an even greater financial divide than has existed in this nation for decades. Helicopter money done correctly, would give us some inflation, but controlled in a way that would cause everyone to benefit.
As it is now, even the local 1 percent people are being left behind compared to the national 1 percent. In certain states, 1 percenters make millions. In other state their incomes are relatively paltry. There is not only a financial divide in America but also a geographical/financial divide.Helicopter money would be dispersed equally among all Americans. It would likely benefit geographical areas that are falling behind too.
Disclosure: I am not an investment counselor nor am I an attorney so my views are not to be considered investment advice.
Disclosure: I am not an investment counselor nor am I an attorney so my views are not to be considered investment advice.less