Federal Reserve Chairman Ben Bernanke considers it to be time for more fund transfers to the coffers of struggling financial institutions here in the United States. The details seem to be basically more of the same proposed solutions from the fall of 2008. If you are interested in reading some of his thoughts as portrayed in the common news media, see his comments quoted in this recent CNN.com article.
In short, while speaking in London recently, he cautioned that the proposed funds for the economic stimulus plan — supported by the robbing of American citizens— are “unlikely to promote a lasting recovery unless they are accompanied by strong measures to further stabilize and strengthen the financial system.” This means he is priming for a request for more government funds in exchange for government equity positions in the banks.
There is no mention of the fact that no lasting recovery can possibly come from (1) misallocation of the factors of production, (2) inflation of the money stock in massive proportions, and (3) the squeezing out of capital (in addition to the already-misallocated production factors) from more appropriate, entrepreneurial lines demanded by the free market.
It is interesting to see the psychology at play here: give the banks more money or else the massive stimulus will fail due to “instability.”
It is unclear whether this type of scare tactic will ever stop working, but if the recent past is any indicator, Mr. Bernanke will get his wish for more funds. Additionally, Bernanke is calling for global central-bank cooperation. This can be construed to mean global inflation in concert, the bank controllers reaping the benefits while the dollar and other centrally planned currencies are inexorably plundered of purchasing power.
Anyone who has studied free-market economic principles even briefly will have strong concerns regarding these statements. At a deeper level, one hopes that common sense would make it clear to even those who have not been fortunate enough to learn about sound-money principles that these ideas propose a dangerous path. Continue reading . . .
