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Poole: The Fed is printing money
Wednesday, January 07, 2009
My personal list of former members of the Federal Reserve who merit respect for their contributions to the world is rather short. Let's see... there's Paul Volcker and ... well, since he entered private practice, former St. Louis Fed President William Poole, who appeared on Bloomberg television yesterday to announce to the world that the Fed is printing money.
Click to play in a new windowYou can skip right to about the 14:30 mark to hear the following comments regarding the minutes from the December FOMC meeting:
If the FOMC had set a reserve target, then that would have constrained the board in terms of authorizing new credit facilities. What's being done now is that the board's new credit facility are being financed by printing money which is completely out of context to what is supposed to be an FOMC responsibility.Bill's other notable accomplishments this year include announcing to the world that Fannie Mae and Freddie Mac were insolvent in this Bloomberg report that appeared about two months before the GSE's were nationalized in September.
5 comments:
Tim very good blogspot...
however becareful of praising
Volker he is part and parcel of this mess, as a big establishment
figure, CFR guy, he never shouted loud enough and now he's lending his name to the Obama admin.
It's almost commical how his name has been tossed around Car Czar for one...and as far as W Poole goes he's the lesser of many evils but he's been backing the bail out from day one...the only crediible
figure's out there is Jim Rogers and Peter Schiff...Joseph
Hi Tim,
I've been a big fan of Bill the Butcher for several years. He saw some of the outlines of the present crisis coming for a long time and tried to move the GSEs away from their too-big-to-fail status.
In the event, there was too much political support for Fannie & Freddie in Congress. Not long before the crisis hit, the Bean-Neugebauer Amendment actually legislated away the new FHFA's authority to even consider systemic risk for GSEs. That's got to look pretty silly now, but it's a good indication of how blind Washington was to the looming financial train wreck.
It's ironic that the only systemic risk that Greenspan ever saw was the GSEs.
Poole's announcement means we can expect the wage-price spiral to begin its upward climb around the time the stimulus is enacted (Feb-March).
No Anthony, it will be strictly a price spiral. No wage inflation here. There is practically infinite amount of labor at various skill levels. That plus flat world means, US worker's wages track those of Mexicans, Chinese and Indians. The era of affluence is over. We should get over it; earlier the better.
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