Federal Reserve Delays Taper, Continues Debasement
Five years ago, I found myself in Buenos Aires, Argentina on a long-awaited vacation to the South American country. The country has a very European flavor with some 97% of its population having Euro roots. Specifically, there is a concentration of Italian and German surnames in that country. It was interesting to me as a native Central American how there were so many famous people from Argentina with Italian names (Manu Ginobili of NBA fame and Gabriela Sabatini from the world of tennis). This Italian heritage definitely comes into play in Argentine politics.
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12/19: Mark “dipthrong” Herm, an online poker superstar over the last 5 years, joins BIG Dave and Steve Karp to discuss his deep run at EPT Prague. He also talks about his experiences as a backer along with his current gig hosting a poker podcast. [Visit Website] [Download MP3].
12/22: David Randall made his second appearance on the Strategy with Kristy Podcast this week. After finishing third in a $1,125 buy-in no-limit hold’em World Series of Poker Circuit Harrah’s Rincon prelim event and then eighth in the $1,675 Main Event, Randall’s live tournament winnings are nearly $500,000. That, coupled with his online tournament winnings of more than twice that, make him a player to look out for in the upcoming year. [Visit Website] [Download MP3].
Other details released on Wednesday show that the Fed’s expansion of the monetary supply is not having their desired effect of increasing prices at a rate of 2 percent per year, with their latest projections predicting increases of 1.2-1.3 percent for 2013, 1.5-1.7 percent for 2014, 1.7-2.0 percent for 2015, and 1.9-2.0 percent for 2016. The projected annual growth in gross domestic product (GDP) for 2013 and 2014 was revised downward from the June projection, with the 2013 projection dropping to 2.0-2.3 percent from 2.3-2.6 percent, and the 2014 projection dropping to 2.9-3.1 percent from 3.0-3.5 percent.
We went into debt though less for projects and more towards entitlements. Our wars were less against countries and more towards combating terrorism though the costs were no less significant. We have certainly had our share of state takeover of private debts. The bailouts of 2008-2009 moved private debt towards the public. More surreptitiously, the unofficial financial arm of the government (the Fed), has undertaken a massive acquisition of public and private debt since 2008 to the tune of trillions. Much of the private debt is in the form of home mortgages. This Fed action does not allow rational pricing in the marketplace and tends to distort markets.
These projections would seem to indicate that the current policies of the Fed are not helping the economy to recover, and are merely sustaining it artificially. The Keynesian school of economics explains this through the concept of a liquidity trap, while the Austrian school of economics explains this through the concept of malinvestment.