Title: Economics Professor Dr. Allan H Meltzer, Where He and I Agree as to What the US Fed will Do and NOT Do.
Author: Andrew M Molchan
Date: Tue July 10th, 2012
July 10, 2012, ANDY'S UNPOPULAR INSIGHTS. As Crazy as I sometimes Seem, Eventually Main Line Opinion Catches Up to Where I've Been.
Today's WSJ has an article by Dr. Allan H Meltzer Ph.D UCLA. Dr. Meltzer has written several books on economic policy and history. He was on the Council of Economic Advisors for both Presidents Kennedy and Ronald Reagan. He is considered to be one of the World's foremost experts on Monetary Police.
Dr. Meltzer is known for his famous aphorism, "Capitalism without Failure is like Religion Without Sin - it Doesn't Work."
In Dr. Meltzer's WSJ article of today (July 10th), he says some of the thing I've been saying for the last five years.
His point is that FED money manipulations CANNOT compensate for YEARS of BAD Laws from Congress and the White House. That's been one of my views for many years.
Dr. Meltzer wrote, "Today's economic problems are serious, but the FED cannot do much about them... To get out of our bad economic situation we need coherent long-term Fiscal Policy, especially entitlement reforms."
By "Fiscal Policy" he means LAWS passed by Congress and signed by the President.
For the last five years I've been saying that the FED's Madoff Accounting and Queer Money CANNOT un-due decades of BAD LAW. Congress worked hard to turn America into General Motors, and it SUCCEEDED.
For years I've said that the FED's QuEer Money, crooked and Twisted-Accounting makes it possible for Congress and the President to NOT pass the Laws needed for a Real long-term Recovery. The FED makes it possible for US Presidents and Congress to be a Cowards.
In my last essay of a few days ago, July 8th, I mentioned once-again that the FED's low mortgage rates are counterproductive, HAVE DONE NOTHING for real estate sales since 2006, and ONLY made Proven Failure bigger.
Dr. Meltzer, who's a "somebody" rather than a nobody like me, basically said the same. He wrote, "With mortgage rates lower than ever...what can be gained by dropping the mortgage rate another small fraction?"
Dr. Meltzer goes on to warn, "Evidence is growing that higher inflation is in our future...One of the many costs of the FED's excessive attention to the near-term is that it WILL WAIT until AFTER the inflation is upon us before it does anything to stop it. The FED's view is that by raising interest rates enough it can stop any inflation. However, will the politicians, public, business and labor unions accept the necessary level of increased interest rates? Don't count on it."
To me, I read Dr. Meltzer's remarks as saying, bet on the FED being cowards first, and waiting far too long to make policy changes. Inflation will get out of control, and we'll need 15% FED interest rates like in 1980 to get inflation back down.
Do the math on 15 Trillion Dollars of Gov Bonds at 15% interest.
As a nobody, I can be a lot less diplomatic than Dr. Meltzer. My view is that if inflation returns, the FED is a PROVEN Group of ass-kissing whores who only worry about re-electing whomever is in the White House. Based on the FED's past actions, Inflation would have to be totally OUT OF CONTROL before the FED cowards did anything.
PS. In another but related area, we have the, AFI Firearms Sales Fear Factor Index. When the general public is frightened, the sale of guns goes UP. The Summer is normally the slowest part of the year for gun sales. However, this summer gun sales are very strong. The voting public is afraid. As I see it, they have very good reasons to be very afraid.