Friday, November 7, 2008

Andrew Jackson Turns in His Grave

Howard S. Katz has posted two blogs on the growth of monetary reserves and Federal Reserve bank credit. Most economists now agree that the unemployment of the Great Depression was caused by a contraction of monetary reserves followed by popular insistence on maintenance of pre-existing wages. The "recovery" that stimulative monetary policy began to create in 1936 was stopped by further contraction of the money supply, resulting in new stock market lows and unemployment in the late 1930s. These problems were caused initially by monetary expansion in the 1920s by Benjamin Strong's Fed. The stock market bubble that led to the 1929 stock market crash was a monetary phenomenon. Likewise, the housing bubble of the past six years and the tech bubble of seven and eight years ago were all due to Federal Reserve manipulation. It seems that politicians can't keep their fingers out of the cookie jar. What irritates me is that the pissant media, from Fox to MSNBC, blames these problems on the "free market". If government control and manipulation of interest rates to stimulate bubbles is "free", then they are right. But unfortunately, our pissant media friends are ignorant of the meaning of the word "freedom" in America and American history.

Katz produces these charts:

I. Federal Reserve Bank Credit growth 130% since August(which apparently leads monetary base growth):

II. Monetary base growth: 20% since August:

Andrew Jackson turns in his grave at the sight of self-indulgent America, once the home of dynamic industrial growth, now the home of Wall Street beggars looting the public treasury while an ignorant public looks on.

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