Loading ...DELRAY BEACH, Florida – The markets continue to dawdle. Not much conviction in either direction.
We’ve already looked at the War on Poverty, the War on Drugs and the War on Terror.
So let’s move on… using our new lens to look at another of the feds’ fake wars.
Dirty War
No war was ever officially declared against the markets.
But for four decades the feds conducted covert operations… a dirty war in which they’ve tried to mislead, obstruct, and suppress market forces.
They used fake money, fake savings, and fake interest rates to confuse investors, businesses, and consumers.
They didn’t say so directly, but their purpose was to give out false signals so that people would change their behavior.
“Demand” was too weak, they said. What to do about it?
They flooded the system with phony savings (credit).
Price signals were distorted. Credit limits seemed to disappear. Debt limits were eased.
Then, in 2008, the war turned hot… with the feds actively and overtly holding down interest rates to push up stock and bond prices.
In response to the crisis they caused – by encouraging too much debt in the housing sector – they claimed that the “free market” had failed.
They were just responding to the “emergency,” they said.
Soon, everybody got in on the act – expressing an opinion about how high (or low) interest rates should be.
Force and Fraud
Believe it or not, an activist group called “Fed Up” argues that raising rates is… you guessed it… racist!
Institutional Investor magazine reports that a group funded by 32-year-old Facebook cofounder Dustin Moskovitz is lobbying against rate increases on the grounds that higher rates are bad for U.S. workers. From the website:
The truth about the economy is obvious to most of us: not enough jobs, not enough hours, and not enough pay — particularly in communities of color and among young workers.
Some members of the Federal Reserve think that the economy has recovered. They want to raise interest rates to slow down job growth and prevent wages from rising faster. That’s a terrible idea.
We stand with millions of workers and their families in calling on the Federal Reserve to adopt pro-worker policies for the rest of us. The Fed can keep interest rates low, give the economy a fair chance to recover, and prioritize full employment and rising wages.
What? Who are these people? Do they have tails? Horns?
They’re right about one thing: When the Fed tries to control the economy, it is politics, not markets, at work.
Markets work by persuasion and voluntary exchange. Politics works on force and fraud. Fed Up is a political organization trying to influence how the force and fraud is applied.
But let’s look at the feds’ War on Markets through our now-familiar scope. Read more