By Jon MatonisForbes
Monday, April 30, 2012
Somebody finally turned on the lights at the Fed. As a regular subscriber to Wenzel's Economic Policy Journal, I enjoyed reading the full text of Bob's landmark speech to the Federal Reserve Bank of New York last Wednesday. Kudos to Bob on garnering the invitation in the first place. Scott Horton joked on his radio program that it must have been like showing a card trick to a dog (in the words of Bill Hicks).
It's well known that the Fed has discreetly dominated economic journals to quash real criticism. Rather than hurl insults at Fed economists and central planners during a lunchtime gathering in the bank's Liberty Room, Robert tactfully exposed economic fact after economic fact that probably had some in the monetary priesthood questioning the morality of their own careers.
Even though it's a speech more entertaining than effective, this is the chance of a lifetime for an Austrian School economist and I am sure Bob didn't just go for the food. Here are some of the economic gems:
"I scratch my head that somehow most of you on some academic level believe in the theory of supply and demand and how market setting prices result, but yet you deny them in your macro thinking about the economy.Then, he turns his attention to gold:
I scratch my head that somehow your conclusions about unemployment are so different than mine and that you call for the printing of money to boost “demand”. A call, I add, that since the founding of the Federal Reserve has resulted in an increase of the money supply by 12,230%.
So you then might tell me that stable prices are only a secondary goal of the Federal Reserve and that your real goal is to prevent serious declines in the economy but, since the start of the Fed, there have been 18 recessions including the Great Depression and the most recent Great Recession. These downturns have resulted in stock market crashes, tens of millions of unemployed and untold business bankruptcies."
"In this very building, deep in the underground vaults, sits billions of dollars of gold, held by the Federal Reserve for foreign governments. The Federal Reserve gives regular tours of these vaults, even to school children. Yet, America’s gold is off limits to seemingly everyone and has never been properly audited. Doesn’t that seem odd to you? If nothing else, does anyone at the Fed know the quality and fineness of the gold at Fort Knox?
In conclusion, it is my belief that from start to finish the Fed is a failure. I believe faulty methodology is used, I believe that the justification for the Fed, to bring price and economic stability, has never been a success. I repeat, prices since the start of the Fed have climbed by 2,241% and there have been over the same period 18 recessions. No one seems to care at the Fed about the gold supposedly backing up the gold certificates on the Fed balance sheet. The emperor has no clothes.
The noose is tightening on your organization, vast amounts of money printing are now required to keep your manipulated economy afloat. It will ultimately result in huge price inflation, or, if you stop printing, another massive economic crash will occur. There is no other way out."And of course the memorable grand finale:
"Let’s have one good meal here. Let’s make it a feast. Then I ask you, I plead with you, I beg you all, walk out of here with me, never to come back. It’s the moral and ethical thing to do. Nothing good goes on in this place. Let’s lock the doors and leave the building to the spiders, moths and four-legged rats."