Trump is Right to Blow Up the Fed

[piezoe]

The fact that the Fed's #1 cheerleader on this site, the so-called Libertarian that supported the bailout of AIG and GM, etc, thinks I am misguided makes me feel even more certain of my position.

That's not as very sound criterion on which to base a high opinion of your position.

 

[Tsing Tao]

That's not as very sound criterion on which to base a high opinion of your position.

Sure it is. If someone you know to be a shill (for an organization thought to be the source of much of American's economic woes by people you highly respect) believes you are mistaken, you can bet you are on solid ground.

 

[piezoe]

Read the context of the reply to UsualName. The Federal Reserve killed the housing market (for millenials). They did this by inflating asset prices through easy money policy until housing prices were way beyond the level millenials can afford. They didn't kill the housing market, they inflated it beyond affordability. Of course, eventually when everything comes crashing down like it did before, it will be because they did it.

Remember Bernanke telling everyone to go out and get an adjustable rate mortgage? Remember when Bernanke said there would be no housing crisis? Good times.

There is truth in what you write. And I know your time frame now. I don't have time to discuss, but i plan to get back to you. Thanks for answering in a substantive way. But let me put you on warning that your going to have a hell of a time rationalizing the Fed should be blown up based on these arguments.

 

[TJustice]

the propaganda is real from piezoe.

by the way I had no idea Milton Friedman was going to tell you exactly what I have been telling you late..ly
the only think I would ad here is that the fomc has no power to change Fed policy unless everyone agrees... including the 5 bank appointed people.

.



2. With respect to Reaganomics.... it was followed by a 20 year or more boom in our economy
Democrat policies led to such a bad economy Carter had to give his malaise speech in which he said we should get used to underperformance and the inflation weak economy issues we were suffering

We boomed after volker choked off inflation and reagan lowered taxes.

Any issues you have brought up about reagan in the past were misguided.

50 percent of our country does not even pay income tax now... So reagan had nothing to do with their problems.

The inequality comes about from high taxation and the 40 to 60 million immigrants we have brought in since reagan.

Freidman was not a radical. he was a towering intellect.

Friedman was a radical. He was a mixture of very good ideas and horrible ideas. Whereas most of us are mixtures of pretty good ideas and some not so good. Friedman was at the extremes. When the Fed tried his ideas about controlling inflation via the money supply, the experiment failed mightily! (Volcker's time) He had influence over Reaganomics which we have yet to recover from. Yet I can't entirely dismiss his thinking as totally nuts, because in fact we have gone way overboard with regulatory capture, something that would have been entirely held in check had Friedman's ideas persevered.

As a young man he was greatly influenced by Hayek and attended the Mount Pelerin Society Meetings. The irony is that Hayek moderated his views as he got older, and recognized and admitted where he had gone wrong. Whereas Friedman, while he changed his views as he matured, never fully recognized, or was too vain to acknowledge, where he had gone badly wrong.

My defense of the Fed in these Forums is only a defense against the ridiculous claims of those who know nothing of Central Banking and its critical role in creating a stable banking and monetary environment for business and society. But my allegiance and respect is not blind allegiance. The Fed has made serious mistakes from time to time. On balance however, it is one of the best run Federal agencies, and the model to which the rest of the world aspires..

 

[UsualName]

Friedman was a radical. He was a mixture of very good ideas and horrible ideas. Whereas most of us are mixtures pretty good ideas and some not so good. Friedman was at the extremes. When the Fed tried his ideas about controlling inflation via the money supply the experiment failed mightily! (Volcker's time) He had influence over Reaganomics which we have yet to recover from. Yet I can't entirely dismiss his thinking as totally nuts, because in fact we have gone way overboard with regulatory capture, something that would have been entirely held in check had Friedman's ideas persevered.

As a young man he was greatly influenced by Hayek and attended the Mount Pelerin Society Meetings. The irony is that Hayek moderated his views as he got older, and recognized and admitted where he had gone wrong. Whereas Friedman, while he changed his views as he matured, never fully recognized where he had gone badly wrong.

This is a good take on Friedman, imo. I always liked his saying that we should judge policies on their results rather than their intentions.

He would have lost his mind in today’s world of disinformation though and his stance on issues like the minimum wage was just completely wrong.

So, yes, I agree he was a mixed bag and you have to be able to differentiate his brilliance and from his not so brilliant ideas.

 

[Tsing Tao]

There is truth in what you write. And I know your time frame now. I don't have time to discuss, but i plan to get back to you. Thanks for answering in a substantive way. But let me put you on warning that your going to have a hell of a time rationalizing the Fed should be blown up based on these arguments.

I'm not advocating the Federal Reserve be blown up because of this one argument.

 

[UsualName]

There is truth in what you write. And I know your time frame now. I don't have time to discuss, but i plan to get back to you. Thanks for answering in a substantive way. But let me put you on warning that your going to have a hell of a time rationalizing the Fed should be blown up based on these arguments.

Read the context of the reply to UsualName. The Federal Reserve killed the housing market (for millenials). They did this by inflating asset prices through easy money policy until housing prices were way beyond the level millenials can afford. They didn't kill the housing market, they inflated it beyond affordability. Of course, eventually when everything comes crashing down like it did before, it will be because they did it.

Remember Bernanke telling everyone to go out and get an adjustable rate mortgage? Remember when Bernanke said there would be no housing crisis? Good times.

Hold on a second you two, you’re very focused on housing prices but why should an asset’s affordability be based on price but not income and existing debt?

There’s a whole other side to this equation you guys aren’t considering.

 

[Tsing Tao]

Hold on a second you two, you’re very focused on housing prices but why should an asset’s affordability be based on price but not income and existing debt?

There’s a whole other side to this equation you guys aren’t considering.

Its not that we aren't considering it, but rather we are focused on the problems at the Fed causing this - which is the point of the thread. If you want to argue that housing affordability is also affected by income and existing debt because of income inequality, I'd be inclined to agree with you. But the primary issue at work here is affordability of housing because asset prices have been improperly inflated with cheap money (which also drives an expansion of debt and over leverage, though in the case of Millenials, that is probably more an education payoff than any other debt).

 

[TJustice]

1. I can help you all solve the conundrum.

When the fed prints trillions of dollars it creates significant inflation in many assets classes.
Frequently real estate is the beneficiary.. stocks too.

However when you couple a high inflation environment with high taxes... its very hard to keep your assets. Property taxes go up. Tax bills become due. If you were successful the asset gets taxed out of the countrol of you beneficiaries withing a generation or two.

Finally, you have an oddity in the market... that few recognize.
By having tax write offs on mortgage interest you allow the same people to drive the asset price higher.

By having govt programs which subsidize or back some of the mortgages you allow risky loans to go to more people driving the price of the asset higher

By having govt programs which allow for 3% down you drive the price of the asset higher.

So everyone has to give more of their income to the bankers who create the money for the loans.

2. Then you do this with student loans.

3. Then you do this with health care and to some degree other insurance products.


If you all don't see the evils of central banker cronyism yet... you are drones.
Bankers have turned the public into economic surf through the politicians through inflation, taxation and govt interference...

Which is not surprising since their biggest asset is the politicians of both parties.

Hold on a second you two, you’re very focused on housing prices but why should an asset’s affordability be based on price but not income and existing debt?

There’s a whole other side to this equation you guys aren’t considering.

 

[Tsing Tao]

I can help you all solve the conundrum.

When the fed prints trillions of dollars it crates significant inflation in many assets classes.
Frequently real estate is the beneficiary.. stocks too.

However when you couple a high inflation environment with high taxes... its very hard to keep your assets. Property taxes go up. Tax bills become due. If you were successful the asset gets taxed out of the countrol of you beneficiaries withing a generation or two.

Finally, you have an oddity in the market... that few recognize.
By having tax write offs on mortgage interest you allow the same people to drive the asset price higher.

By having govt programs which subsidize or back some of the mortgages you allow risky loans to go to more people driving the price of the asset higher

By having govt programs which allow for 3% down you drive the price of the asset higher.

So everyone has to give more of their income to the bankers who create the money for the loans.

2. Then you do this with student loans.

3. Then you do this with health care and to some degree other insurance products.


If you all don't see the evils of central banker cronyism yet... you are drones.
Bankers have turned the public in surf through the politicians they own.

There's no conundrum. Its a very obvious issue.