The Fed

It is the seeking of profits that is the key to increased living standards for everyone. But high profits do not necessarily correspond to real economic growth and can come about due to adverse circumstances.

Hazlitt not only has a clear and lucid writing style; of all economists who are gifted at writing for a popular audience, Hazlitt has by far the soundest grasp of his subject. Hence, he is able to put correct and even profound analysis into a highly readable style.

Recorded at the Mises Circle at Furman University on November 13th, 2010.

Recorded at the Mises Circle at Furman University, November 13th, 2010.

Recorded at the Mises Circle at Furman University on November 13th, 2010.

Bernanke — with Paul Krugman looking over his shoulder and telling him where to put the paddles and how many volts to shock the patient with — thinks he can crunch the data, make a diagnosis, concoct the right monetary witch's brew, and inject lots of it to make us all employed and living happily ever after.

Can the government tell the Fed what to do? If Congress and the president are agreed about what to do, yes. If there is disagreement over monetary policy — and there usually is — then the Fed does pretty much what it wants.

The worst of Bernanke's statements came in 2006, near the zenith of the housing bubble. This was the era of the subprime mortgage, the interest-only mortgage, the no-documentation loan, and the heyday of mortgage-backed securities.

If we wish to culminate the fall of the Berlin wall and get rid of the real socialism that still remains in the monetary and credit sector, a priority would be the elimination of central banks, which would be rendered unnecessary as lenders of last resort if a 100 percent reserve reform were introduced.

A so-called lowering of "real" interest rates by means of money pumping is basically an act of a diversion of real wealth from wealth generators to various nonproductive activities. Hence, contrary to popular thinking, the Fed's attempt to lower the real interest rate in fact leads to a higher real interest rate.