24 May 2010

Why You Read Free Advice

Economics 6 Comments

The Breaking News headline at CNBC:

The Federal Reserve Does Not Expect to Sell Any Assets Until the Economy Recovers (story developing)

They have painted themselves into a corner, folks. They only time they will seriously consider reducing the monetary base, is when milk and gasoline prices are rising at significant monthly rates.

At the conference in Manhattan, a very intelligent woman (who I think reads this blog–I’m not making fun of you, honest!) asked the panel if the Fed would have the ability to avert deflation, what with the deleveraging process.

In my wise-alecky response, I pointed out that Bernanke had the technical ability to create a quadrillion dollars on Wednesday if he wanted to. He doesn’t need the commercial banks to advance loans. Bernanke has now gotten everyone used to the idea that he can unilaterally write checks on the Fed, and buy any financial asset he wants, so long as he can give a sound bite about why this will help.

6 Responses to “Why You Read Free Advice

  1. Gene Callahan says:

    I read it so I can pick up things like “I think we are in store for massive yr/yr price inflation (where 8% < massive < 100%) within the next 6 – 12 months," and then place an opposite bet in my portfolio.

    Just teasing you, Bob.

    • bobmurphy says:

      That’s fine. I would like to think I have been quite forthright in letting everyone know I have been jumping the gun on my CPI predictions. Fortunately, my advice (buy gold and silver) was still good.

  2. Jim O'Connor says:

    So Bob, do you do stand up as a second job? That talk was a riot. Probably one of your smoothest yet that I’ve heard. My wife came into my office to find out what was so funny. She doesn’t really get economics humor, so she just smiled. What can I say?

    • bobmurphy says:

      thanks but what are you talking about? the manhattan talk?

      • Lequita says:

        I listened to your talk on interest rates at Mises Circle they just posted on their website. It was pretty funny.

  3. Jim O'Connor says:

    Yes, the Mises takes Manhattan speech was pretty funny and well organized.