The Washington Post Runs An Article Entitled “Five Myths About The Federal Reserve” Authored By An Economist Linked To The Rothschilds
There have been so many attacks on the Federal Reserve recently that the mainstream media now feels almost forced to try to defend their actions. The most blatant example of this recently was an article in the Washington Post entitled "Five Myths About The Federal Reserve". The article was authored by Greg Ip, the U.S. economics editor of The Economist. According to Wikipedia, the Rothschild banking family is a partial owner of the firm that operates The Economist. You would have thought that they would have gotten someone a whole lot less obvious to produce this propaganda piece, but apparently they did not think anyone would notice. Of course an economics editor of The Economist is going to defend the Federal Reserve. He would be fired if he didn't. The Economist is well known to be a mouthpiece for the international central banking establishment. But what is really sad is how poor a job Greg Ip did in defending the Fed. If these are the best intellectual arguments they can come up with then they are in huge trouble.
Below are the "five myths" that Greg Ip attempted to debunk in his article. I will tackle them one by one.....
#1 The First Myth About The Federal Reserve The Washington Post Supposedly "Debunked": By printing money, the Fed will create runaway inflation.
Are we going to have hyper-inflation tomorrow because the Federal Reserve is pumping $600 billion into the U.S. economy?
But all journeys begin with a single step. By initiating a new round of quantitative easing, the Federal Reserve has taken several huge steps down the road that could eventually lead to out of control inflation. Let us hope that they stop and that we never get to that point.
However, the truth is that quantitative easing will cause some inflation. It is only a matter of how quickly that money gets out of the banks and into the hands of consumers.
In his article, Greg Ip admits that the decision was made to go ahead with more quantitative easing because "the Fed is trying to stimulate spending", but then he also tries to argue "this money can lead to inflation only if banks lend it and consumers and businesses spend it."
So either the Federal Reserve fails to stimulate spending (which is supposedly the whole purpose of quantitative easing), or spending will be stimulated and we will have inflation.
Perhaps Greg Ip should review some of the statements by top Federal Reserve officials in recent months where they openly admit that they want to create more inflation in order to stimulate the economy.
The notion that "this money can lead to inflation only if banks lend it and consumers and businesses spend it" is nonsensical at best. According to Greg Ip, we will be perfectly fine as long as nobody lends any of this money and nobody spends any of this money. Of course that is the whole purpose behind quantitative easing, but that little fact seems to have escaped the U.S. economics editor of the Economist.
#2 The Second Myth About The Federal Reserve The Washington Post Supposedly "Debunked": The Fed is endangering the global recovery by trying to drive down the dollar.
Greg Ip doesn't even bother to try to debunk this myth. He openly acknowledges that quantitative easing will drive down the value of the dollar....
But while a weaker dollar isn't the direct goal of the Fed's actions, it's a predictable and welcome consequence. When the Fed eases monetary policy - either by lowering short-term rates or, nowadays, by forcing down long-term rates with bond purchases - it makes Treasury bills and bonds less appealing. Investors flock to alternatives, including foreign stocks and bonds, driving up other currencies relative to the dollar. The lower dollar complements lower interest rates in spurring economic growth.
What Ip does claim is that all of this is okay because the Federal Reserve is not trying to drive down the value of the dollar on purpose. It is just an unintended "consequence" of trying to stimulate the economy.
Unfortunately, the rest of the world does not see things that way. They are not stupid. They realize that the Federal Reserve is openly devaluing the dollar and they are not happy about it.
But Barack Obama just keeps on defending Bernanke and the Federal Reserve....
"This decision was not one to have an impact on the currency, on the dollar."
That must have been one of those moments when Barack Obama was not in front of a teleprompter.
In any event, anyone with a brain should have realized that quantitative easing was going to drive down the value of the dollar.
Claiming that the Federal Reserve's primary goal was not to devalue the dollar and that we should trust their intentions is not going to make it all better.
#3 The Third Myth About The Federal Reserve The Washington Post Supposedly "Debunked": The Fed is trying to finance the government's profligacy.
In his article, Greg Ip admits that the Federal Reserve is financing U.S. government debt....
By buying Treasury debt, the Fed is in effect financing the federal deficit.
But he says that this is okay because "there's no shortage of private and foreign investors to buy Treasury bonds."
According to the Wall Street Journal, in order to repay maturing bonds and finance the massive budget deficit, the U.S. government will have to borrow 4.2 trillion dollars in 2011.
So what do you think would happen if the Federal Reserve sat back and did not buy up a single penny of that debt?
You guessed it - interest rates on U.S. government debt would soar into the stratosphere.
Of course what Greg Ip failed to mention was that just last year Federal Reserve Chairman Ben Bernanke promised Congress that the Fed would not monetize U.S. government debt. In cased you missed it, here it is on video....
But now that is exactly what the Federal Reserve is doing. Ben Bernanke has lost virtually all credibility at this point, and anyone that wants to maintain their own credibility should not be defending him.
#4 The Fourth Myth About The Federal Reserve The Washington Post Supposedly "Debunked": The Fed is immune to politics.
In his article, Greg Ip insists that although the Federal Reserve is "technically independent from the rest of the government", there are still many ways that our political system can influence it.
As examples, Ip said that the president and Congress "can privately and publicly browbeat the chairman, withhold his reappointment, appoint compliant governors or amend the Federal Reserve Act."
Okay, so exactly when have any of those things actually happened in recent memory?
Even Ip acknowledges that the Federal Reserve has had an easy time under all of the most recent administrations.....
"Like Bill Clinton and George W. Bush before him, President Obama has respected the Fed's independence."
But the truth is that the unelected Federal Reserve is actually accountable to nobody. If you don't believe that, perhaps you should listen to former Federal Reserve Chairman Alan Greenspan make that exact claim in the following video....
Are you starting to get the picture? According to Greenspan, nobody in the U.S. government can overrule anything that the Federal Reserve does.
As I noted in another article, the Federal Reserve is very open about the fact that it is not an agency of the federal government....
The truth is that the Federal Reserve is about as "federal" as Federal Express is. In defending itself against a Bloomberg request for information under the Freedom of Information Act, the Federal Reserve objected by declaring that it was "not an agency" of the U.S. government and therefore it was not subject to the Freedom of Information Act. It is kind of funny how Fed officials are always talking about how important their "independence" is, but whenever anyone starts criticizing them for being private they start stressing their ties with the government.
If only a significant number of our politicians would start standing up to the Federal Reserve - then we might have something to talk about.
#5 The Fifth Myth About The Federal Reserve The Washington Post Supposedly "Debunked": Bernanke knows what he's doing.
In the article, Ip seemed to want to make the point that Bernanke is only human just like the rest of us, but he spent a whole lot of space telling us how wonderful he is. For example, Ip was apparently quite serious in his contention that we should trust Bernanke because he has such "an impressive resume" and that he knows what he's doing....
Bernanke came to his job with an impressive resume, including years of studying the Great Depression. To that he can now add the irreplaceable experience of running the central bank through one of its most harrowing periods. If anyone should know what he's doing, it's him.
Bernanke knows what he is doing?
Well, has Bernanke ever run a business?
Has Bernanke ever been elected to anything?
Had Bernanke ever successfully run any major organization prior to being put in charge of the U.S. Federal Reserve?
The truth is that Bernanke has spent most of his career teaching at major universities such as Stanford and Princeton. He has very, very little experience with the real world.
So how has he done as Fed Chairman so far?
Unfortunately, he has done very poorly.
The video below shows various interviews with Bernanke from 2005 to 2007 that demonstrate that he had absolutely no clue that the housing bubble was coming....
The truth is that there are legitimate reasons why so many people are criticizing the Federal Reserve.
We didn't just wake up one day and decide that we didn't like the way Ben Bernanke's beard looks.
The Federal Reserve system is fundamentally flawed and the Fed's mismanagement our our economy is at the core of our economic problems.
When the Washington Post publishes articles that lecture us on how we need to shut up and trust the wise men over at the Federal Reserve it just shows how out of touch they are with the American people.
We are headed for an absolute economic disaster, and the Federal Reserve is leading the way. Anyone who claims that there are not legitimate reasons for deeply criticizing the Federal Reserve just does not get it.http://endoftheamericandream.com/archives/the-washington-post-runs-an-article-entitled-five-myths-about-the-federal-reserve-authored-by-an-economist-linked-to-the-rothschilds