The Federal Reserve has been run by a bunch of inflationist Keynesians for years. At a time, there was a slim hope that the central bank would change once Alan Greenspan, a student of Ayn Rand, an objectivist philosopher and proponent of the gold standard, became chairman, but he abandoned his principles and immediately turned on the printing presses.
After Greenspan came Ben Bernanke, another Keynesian who had been a strong advocate of diminishing the purchasing power of the United States dollar and dropping bags of money from his black helicopter. Once Bernanke finished his destructive work of the U.S. economy, another Keynesian followed earlier this year: Janet Yellen.
Yellen conceded in a recent interview with the New Yorker that Keynesian economics will dominate the future of Fed monetary policy, a revelation that doesn’t necessarily surprise any critic of the central bank. Yellen told the magazine that the Keynesian economic model and “behavioral finance” have “come out of this crisis with greatly enhanced prestige in academia, and in institutions like [the Federal Reserve].”
The Fed Chair explained that even if/when the U.S. economy heads back on the right track, the nation will still need “unusually accommodative monetary policy.” In other words, the central bank will save us from ourselves and Keynesian economics is here to stay, a troubling matter for the country that has been afflicted by bubbles, price inflation, savings deterioration and artificially low interest rates.
The magazine described Yellen as being the most liberal since Marriner Eccles, the Fed Chair during the Roosevelt and Truman administrations.
Yellen’s comments are quite timely as economist Thomas Sowell quoted a colonial man at a London audience:
“Please do not do any more good in my country,” he said. “We have suffered too much already from all the good that you have done.”
In typical Keynesian fashion, the bubbles have formed and, according to David Stockman, former Reagan budget director and author of “The Great Deformation,” they are on the verge of bursting:
“At the end of the day, the Fed and its fellow traveling central banks have systematically dismantled the natural stability mechanisms of financial markets. Accordingly, financial markets have now become dangerous casinos in which speculative bubbles are guaranteed to build to dangerous extremes as the central bank driven financial inflation gathers force. That’s where we are now. Again.”
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