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Thread: Financial Regulation and the Big Fat Very Visible Hand

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    Join Date
    Mar 2006
    Boston, Mass.

    Default Financial Regulation and the Big Fat Very Visible Hand

    Financial Regulation and the Big Fat Very Visible Hand

    Financial Regulation and the Invisible Hand
    April 11, 2007

    Remarks by Ben S. Bernanke

    At the New York University Law School, New York, New York

    "Market forces determine most outcomes in our economy..."


    AntiSpin: Thanks to google alerts, over the years I read nearly all of the docs issued by the Fed. I don't know why I bother. Usually the fallacy is buried in the speech. This time it's in the first eight words.

    Government determines most of the outcomes in our economy. Who wins, who loses. The creation of stock market bubbles, credit bubbles, housing bubbles, currency bubbles.

    Who wins when they rise. Who loses when they collapse.

    What is a house without low interest rates that push LIBOR down to 2.5% (on which adjustable rate mortgages are based), a Fed chairman on the sales team pushing ARMs in February 2005 when fixed rate mortgages are at a 40 year rock bottom, and tax incentives such as the write-off of $500,000 of capital gains for homes owned by a couple for more than two years? Nothing more than a very complex product that breaks a lot and requires a lot of maintenance to maintain its value, and which, according to Robert Shiller's research, appreciates only at the rate of inflation.

    What is ethanol without government subsidies?

    What is the bonar without foreign central banks supporting it? A promise to pay that will not be fulfilled. A symbol of a nation that produces a massive economic surplus but does no more. Without the support of foreign central banks–government–the dollar will decline.

    I could go on.

    "Market forces determine most outcomes in our economy..."

    What is a Fed chairman who tells The Big Lie in the very first eight words of an important speech?
    Last edited by FRED; 04-15-07 at 11:02 AM.



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