Posts Tagged ‘economic crisis’

Please check out our latest interview with Bob Wenzel of http://www.economicpolicyjournal.com and http://www.targetliberty.com where we break down our economy from an Austrian perspective:

http://www.amazon.com/Fed-Flunks-Speech-Federal-Reserve/dp/1312047232/ref=sr_1_1?ie=UTF8&qid=1431141198&sr=8-1&keywords=The+Fed+Flunks

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As I’ve written before our economy is based on bubbles. The Fed inflates a bubble, we have a crash, they reinflate and round and round we go. Right now we are seeing the cheap money find its way into stocks. Last time it was housing. Today’s report of an unexpected 0.5% increase in producer prices in March makes one think the freshly printed dollars may be finding their way into the economy at large. The dollar has taken a bit of a beating this week on the FX market. It was down 2.5% against the Yen which is tough to do given Prime Minister Shinzo Abe’s rampant money printing. Who knows if this is the beginning of a trend but, if nothing else, its a harbinger of things to come.

The main way by which the Federal Reserve seeks to “stimulate” the economy is by manipulating interest rates. It does this through its so called open market operations. In other words, it attempts (most often) to force interest rates down by changing the money supply, i.e. printing money. (more…)