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Prophets and Losses

Home - by - February 6, 2013 - 13:45 America/New_York - 5 Comments

By Thomas Sowell, JewishWorldReview

Now that the federal government is playing an ever larger role in the economy, a look at Washington’s track record seems to be long overdue.

The recent release of the Federal Reserve Board’s transcripts of its deliberations back in 2007 shows that their economic prophecies were way off. How much faith should we put in their prophecies today β€” or the policies based on those prophecies?

Even after the housing market began its collapse in 2006, Federal Reserve Chairman Ben Bernanke said in 2007, “The impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained.”

It turned out that financial disasters in the housing market were not “contained,” but spread out to affect the whole American economy and economies overseas. Then Chairman Bernanke said: “It is an interesting question why what looks like $100 billion or so of credit losses in the subprime market has been reflected in multiple trillions of dollars of losses in paper wealth.”

What is an even more interesting question is why we should put such faith and such power in the hands of a man and an institution that have been so wrong before.




  1. Stranded in Sonoma

    February 6th, 2013

    The reason that the Federal Reserve can afford to continue buying huge amounts of government bonds is that the Fed is authorized to create its own money out of thin air. They use the fancy term “quantitative easing,” instead of saying in plain English that they are essentially just printing more money.

    This is why the power to emit a bill of credit (print paper money) was denied to congress through omission. And because congress can’t print paper money, neither can one of congress’s creations.

    So, to get around this, the Bureau of Engraving and Printing stokes up the presses and prints zillions of sheets of paper. But it’s not “money” because the gov’t doesn’t have that power. The Fed then “monetizes” the paper but doesn’t print it. So neither is violating the constitution. Or so they claim. Their intent is to create paper money which neither has the constitutional authority to do.

    However, I know we can’t go back to a gold standard because then all of our gold would end up China.

    There was a plan to tie the creation of paper dollars to the GDP and we know how safe that would be because the gov’t would never lie about the GDP numbers. Just like how they don’t lie about the unemployment numbers. Another idea is to tie the paper dollars to the population. Which would have somewhat more control but still never completely reliable.

    Either way, we’re stuck with the paper. And as long as spend-spend-spend socialists are in power, we’re stuck with their debt, too.

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  2. Tim

    February 6th, 2013

    All money, gold standard, silver standard, iron standard (Sparta), rice standard (Japan), fiat, whatever, are totally dependent on the honesty and veracity of those who make and oversee the standards.

    Our government is a system of criminality – from the White House, through the Senate and House of Representatives, to the Supreme Court, and down into the State Capitols. None adhere to the Constitution of the United States or even to their individual State Constitutions or Charters.

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  3. Twellsy

    February 6th, 2013

    I’ve always questioned the answers coming out of the Congressional Budget Office. I mean, congress sends the obamacare bill over to them for analysis, and they come back in a couple days with all the answers on cost, affects to the economy, etc. Now how do you do such a complex task, with all the variables, in a couple days? And congress considers it ironclad. Ouiji? A soothsayer? Throw chicken bones and rocks on the ground and read that? Somethin’ ain’t right.

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  4. Dadof3

    February 7th, 2013

    Then Chairman Bernanke said: β€œIt is an interesting question why what looks like $100 billion or so of credit losses in the subprime market has been reflected in multiple trillions of dollars of losses in paper wealth.”


    Not something I want to hear from the guy with his finger on the GO button for the printing presses.

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  5. Dadof3

    February 7th, 2013

    @Sonoma, if ya can’t distill that to a couple of sentences, at most, the Obots will never even try to understand it.

    Marketing to Dummies – is there a book on that?

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