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IPFS News Link • Federal Reserve

Ben Bernanke Blames the Global Financial Crisis on China

They must put something in the water at the Fed, certainly the Board of Governors and the New York Fed. Everyone there, or at least pretty much everyone who gets presented to the media, seems to have an advanced form of mental illness, namely, an pronounced inability to admit error. While many in public life suffer from this particular affliction, it appears pervasive at the Fed. Examples abound including an overt ones like an article attempting to bolster the party line that no one, and hence certainly not the central bank, could have seen the housing bubble coming, or subtler ones, like a long paper on the shadow banking system that I did not bother to shred because doing it right would have tried reader patience Among other things, it endeavored to present the shadow banking system as virtuous (a necessary position since the Fed bailed it out) because it was all tied to securtization and hence credit intermediation. That framing conveniently omits the role of credit default swaps and how they multiplied the worst credit risks well beyond real economy exposure levels and concentrated them in highly geared financial firms. Another example of the “it is never the Fed’s fault” disease reared its ugly head in the context of the G20 meetings. The big row is over global imbalances with the US mad at China for not doing enough to rebalance its economy (code for consume more, export less). China is admittedly trying to take the barmy position that its huge reserves really don’t count (huh?) so I suppose the Fed thinks it can trot out some whoppers of its own.

1 Comments in Response to

Comment by Don Duncan
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You try defending the indefensible. It's extremely difficult. I'm serious. Try coming up with a good lie for fiat money. Even more difficult, try coming up with a way to steal while leaving enough for the producers to continue to live and grow. The temptation is to continually increase the theft until the "golden goose" is killed. It is an age old problem that no one has solved and has led to the downfall of many civilizations. The problem has no solution. What must be questioned is the theft. When theft is no longer accepted and allowed by humanity the cancer of gov will disappear along with war and poverty.