The Fed

It was credit expansion and the attempt to keep prices high that prolonged the Depression, which would otherwise have ended by 1931 or 1932. On this point Bernanke is all wet.

With the US housing crisis metamorphosing into a full-blown financial crisis in the United States and Europe and the specter of a global stagflation looming larger every day, the Fed's credibility and reputation is evaporating with the value of the US dollar.

Some investors have come to believe that, whatever mistake they make, they have a right to their profits, and the authorities will enforce it. The rescue of Bear Stearns, the two GSEs and AIG will only fuel this belief.

The Fed is essentially a giant counterfeiting machine. That would be criminal for you, but is legal for JPMorgan's men under the Federal Reserve Act written by the big bankers.

It is a sign, rather, that we have allowed our monetary, fiscal, and regulatory authorities to lure us like lambs to the slaughter to the unwarranted socialization of the most important sector of the capitalist system.

At the root of the problem are not mortgage-backed assets as such but the Fed's boom-bust policies.

As long as governments and central banks continue to focus on the monetary symptoms of the "secondary depression" and continue to ignore the structural aspects of the "primary depression," they act like quacks.

Only wealth generators can revive the economy by accumulating enough real capital. In this regard, no government or central-bank policies can replace wealth generators.

From “Choice in Currency: A Path to Sound Money”; the Mises Circle in Vancouver. Recorded 13 September 2008.

Mises would clearly see the solution to the fiat-money-generated world disequilibrium as a global return to a commodity-money standard with 100% reserve banking as the only monetary policy rule and a banking order that avoids the disequilibria generated by the politically motivated manipulation of the money supply.