The consequences of a markedly diminished position of the US dollar would be dramatic and of global proportions. While it would affect all economies that are closely related to the US economy, the major impact would fall on the United States itself. A demise of the US dollar as the dominant global currency would mean that the current relation between domestic absorption and production could no longer be maintained.
Was it just a Freudian slip that Greenspand started his recent encomium for Keynesian debasement with a reference to the Gold standard? It was probably inadvertent, but the contrast suggested between real, hard money, freely chosen by market processes, not arbitrarily by the State and its Financiers, was no less resonant for the fact that it was implicit, rather than as shockingly explicit as in Bernanke's recent speech on the subject.
The existence of the money multiplier is the outcome of fractional reserve banking, writes Frank Shostak, which the current banking system makes possible. The money multiplier is not only real; it is a good tool to help us understand the process by which the banking system creates inflationary credit and all of its associated effects.
The Fed has changed the rules under which it can inject liquidity into the system, says Sean Corrigan in this wide-ranging interview. The Fed has made several overt statements of intent that, if necessary, it will buy anything—corporate securities, mortgages, physical assets—it will conduct a "money rain" if it has to.
Most commentators have focussed, with merit, the Fed's official's alarmingly sanguine view that monetary inflation is a tool to combat evils and achieve all manner of economic good. But Ben Bernanke's most revealing remarks concern his subtle references to the Fed as just another branch of the federal government.
No one can contend that the Federal Reserve System has brought economic stability or conquered the trade cycle, writes Hans Sennholz. On the contrary, its critics are convinced that a politically conceived and administered money monopoly, such as the Federal Reserve System, is the worst of all money systems. It will breed business cycles as long as it lives.
The best thing Greenspan can do, other than to close down the fraudulent entity known as the Federal Reserve System, is to sit back and do absolutely nothing. A sedentary Alan Greenspan harms no one. When he is active, however, watch out, says William Anderson. The man is dangerous.
Frank Shostak explains why Greenspan's latest move to cut interest rates will not only not help, but it will actually delay recovery by months or even many quarters. The fundamental problems inhibiting recovery are too severe to be fixed by mere money creation.
The Spitzer restructuring of Wall Street will not achieve its stated objective of restoring confidence in the stock market, writes James Sheehan. Instead, it will create a government sanctioned stock research cartel, the legacy of which will be higher costs, more inefficiency, and less competition.
