sailingaway
05-17-2013, 10:04 PM
The Nobel prize-winning Austrian School economist F.A. Hayek titled his last book The Fatal Conceit to describe the conceit of the notion that socialist central planners could possibly possess all of the detailed knowledge that is in the minds of millions in a market economy to "plan" a socialist economy. His 1974 Nobel prize speech was entitled "The Pretense of Knowledge" and conveyed the same message. Despite the fact that the whole world learned of just how right Hayek, Mises, and the Austrians were for so many decades about socialism upon its worldwide collapse in the late 1980s, America’s central planners keep marching ahead with more and more failed central plans that are based on pretentious fantasies dressed up with unintelligible mathematical economic models – just like the Soviet central planners of the twentieth century.
I speak of course of the Federal Reserve Board and its economic central planners. A caricature of this socialistic central planning mentality was recently on display in the 2012 Annual Report of the Federal Reserve Bank of Minneapolis. The entire 40-page publication is devoted to not one but two interviews with the Minneapolis Fed’s president, one Narayana R. Kocherlakota, who had one of his employees (Doug Clement) throw him a series of softball pitch-style questions.
What one first learns by the interviews is that Fed bureaucrats ignore the age-old economic wisdom about the folly of government-imposed price controls. In this case the price being controlled is various interest rates. Kocherlakota talks of an economic "liftoff plan" that is "to sustain low interest rates; that is, we’ll keep the fed funds rate extraordinarily low at least until unemployment falls below 5½ percent . . ." The Federal Reserve Open Market Committee (FOMC), he says, "will keep interest rates low until, say, mid-2016."
The Fed’s "quantitative easing," which used to be called "inflationary monetary policy," is hailed as a tremendous success by Kocherlakota, citing a speech by Fed Chairman Ben Bernanke as "an excellent assessment of the effectiveness of quantitative easing." This of course is sheer fantasy and butt kissing of the first order by Kocherlakota.
The Fed’s zero interest rate policy is a war on savings, which is to say a war on economic investment, productivity, and economic growth. Savings and capital accumulation must fuel business investment in order for economic growth to occur. Free-market interest rates allow individuals to determine for themselves, based on their rates of time preference (whether to spend more or save more in the present) how much to save and how much to spend. The Fed’s central planners are hell bent on destroying all incentives to save because they are all Keynesian ideologues who believe in the Keynesian superstition that it is possible to consume without first working and producing income with which to purchase goods and services. "[Q]uantitative easing has the impact of pushing down on longer-term interest rates," says Kocherlakota, "And that should be directly stimulative of the economy because by pushing down on market interest rates, people are led to think, ‘Hmm, maybe I shouldn’t be buying those assets that are paying such a low yield. I should spend money instead.’" Of course it has NOT been "directly stimulative" of the economy. Anything but.
more: http://lewrockwell.com/dilorenzo/dilorenzo254.html
I speak of course of the Federal Reserve Board and its economic central planners. A caricature of this socialistic central planning mentality was recently on display in the 2012 Annual Report of the Federal Reserve Bank of Minneapolis. The entire 40-page publication is devoted to not one but two interviews with the Minneapolis Fed’s president, one Narayana R. Kocherlakota, who had one of his employees (Doug Clement) throw him a series of softball pitch-style questions.
What one first learns by the interviews is that Fed bureaucrats ignore the age-old economic wisdom about the folly of government-imposed price controls. In this case the price being controlled is various interest rates. Kocherlakota talks of an economic "liftoff plan" that is "to sustain low interest rates; that is, we’ll keep the fed funds rate extraordinarily low at least until unemployment falls below 5½ percent . . ." The Federal Reserve Open Market Committee (FOMC), he says, "will keep interest rates low until, say, mid-2016."
The Fed’s "quantitative easing," which used to be called "inflationary monetary policy," is hailed as a tremendous success by Kocherlakota, citing a speech by Fed Chairman Ben Bernanke as "an excellent assessment of the effectiveness of quantitative easing." This of course is sheer fantasy and butt kissing of the first order by Kocherlakota.
The Fed’s zero interest rate policy is a war on savings, which is to say a war on economic investment, productivity, and economic growth. Savings and capital accumulation must fuel business investment in order for economic growth to occur. Free-market interest rates allow individuals to determine for themselves, based on their rates of time preference (whether to spend more or save more in the present) how much to save and how much to spend. The Fed’s central planners are hell bent on destroying all incentives to save because they are all Keynesian ideologues who believe in the Keynesian superstition that it is possible to consume without first working and producing income with which to purchase goods and services. "[Q]uantitative easing has the impact of pushing down on longer-term interest rates," says Kocherlakota, "And that should be directly stimulative of the economy because by pushing down on market interest rates, people are led to think, ‘Hmm, maybe I shouldn’t be buying those assets that are paying such a low yield. I should spend money instead.’" Of course it has NOT been "directly stimulative" of the economy. Anything but.
more: http://lewrockwell.com/dilorenzo/dilorenzo254.html