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Bernanke's Nobel: Fueling Inflation
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| Hello everybody and thank you for tuning in to the weekly report, Destroy the Economy, Win a Nobel Prize. | |
| Former Federal Reserve Chairman Ben Bernanke is a 2022 recipient of the Nobel Prize in Economics for his writings on how government should respond to bank failure. | |
| Honoring Bernanke for his advice on what governments should do when banks fail is like giving a fire safety award to an arsonist. | |
| Bernanke was Fed chairman when the housing bubble created by his predecessor Alan Greenspan in the wake of the bursting of the Greenspan's tech bubble and the 9-11 attacks exploded. | |
| When the housing market collapsed, Bernanke worked with Congress and the Bush administration to bail out big games and Wall Street firms. | |
| In the years following the meltdown, the Bernanke-led Fed tried to stimulate the economy via massive money creation, near-zero interest rates, and quantitative easing, where the Fed inject liquidity into the market via purchase of financial assets, including Treasury bonds. | |
| The Fed's post-meltdown policies produced sluggish growth in the Fest, while laying the groundwork for the next bust. | |
| A sign that the next crash was around a corner came in September 2019 when the Federal Reserve began pumping billions of dollars a day into the repurchasing market which banks used to make overnight loans to each other in order to keep that market's interest rates from rising above the Fed's target rate. | |
| The COVID lockdowns then gave the Fed an excuse to push interest rates to zero and massively expand quantitative easing. | |
| The Fed's actions are the prime culprit behind the price inflation plaguing America's economy. | |
| The Fed has responded to the price inflation by increasing interest rates, although rates remain much lower than they would be in a free market. | |
| The fact that even these relatively small increases help push the fragile economy into recession shows the instability of our debt-based economic system. | |
| Bernanke and Congress should have responded to the meltdown by letting the recession that followed the meltdown run its course. | |
| This is the only way the economy can adjust to the market distortions caused when the Fed increases the money supply and lowers interest rates. | |
| Those who worry that this don't do something, just stand there approach would inflict long-term economic pain on the American people should consider the economic depression of the 1920s. | |
| During this depression, the Fed refrained from trying to stimulate the economy and Congress actually cut spending. | |
| The result was the downturn was quickly over. | |
| Sadly, the lessons of 1920 are largely ignored by mainstream economic historians. | |
| In response to my questioning at a Financial Service Committee hearing, then Federal Chairman Ben Bernanke admitted he did not consider gold to be money. | |
| Of course, gold and other precious metals are money because individuals have selected them whenever they had the freedom to choose a currency. | |
| One reason for this is that precious metals are uniquely suited to serve as a stable unit of account. | |
| In contrast, government rulers have favored fiat money precisely because it can never serve as an honest unit of account due to its value being constantly manipulated by central bankers. | |
| This is often done at the behest of power-hungry politicians. | |
| Therefore, under a fiat monetary system, we cannot know the true value of goods and services. | |
| This is why, to create a sound economy that provides prosperity, we should audit the Fed and then end the Fed. | |