Welcome to the Fed's Magic Kingdom!
In the Magic Kingdom of the Federal Reserve, there are no Fairy Godmothers, but money appears faster than you can say Bibbidi Bobbidi Boo.
Do you believe like I believe,
Do you believe in magic
– The Lovin’ Spoonful
Whew! What fun we had last week! It’s the Magic Kingdom for sure.
The Fed pulled a white rabbit out of its hat on Wednesday – a $600 billion mad hare. Stocks soared on Thursday. Commodities soared. Everything soared. Except the dollar. People dropped the buck.
Then, on Friday there wasn’t much follow through. The Dow rose only a few points. Gold continued going up – $14.
What’s ahead for this week? Heck, anything could happen. This is the Magic Kingdom.
What do we mean? Of course, counterfeiting is against the law.
The counterfeiter creates money that looks just like the real stuff, but it has no gold or other backing behind it.
The Fed creates money that looks just like the real stuff. It has no gold or other backing behind it either.
What’s the difference? You go to jail for counterfeiting. But by some magic, it’s okay when the Fed does it.
We have a suggestion. The Fed could save some money by giving up its monopoly on counterfeiting. Allow the private sector to create new money. There are probably plenty of people in jail today who could make useful contributions to our economy. These guys know how to print money. Let them out! They would create money – lots of it. At no cost to the taxpayer.
But wait, the feds want to control the counterfeiting process. They don’t want too much or too little. But just the right amount of new money.
How much is the right amount? Who knows? Between now and June ’11, the Fed will add another $600 billion to the $1.7 trillion it already put into the system. Is that enough?
Darned if we know.
The whole thing would boggle our mind. But our mind was already boggled by the Fed’s last trick.
The Fed increased the world’s wealth by $1.7 trillion last year. That’s a lot of money. What did it mean? Presto, the world was richer. Right? If the world wasn’t richer, the extra money was a hoax, a fraud, and a scam, right?
But if it really did create $1.7 trillion worth of money…representing real wealth…well, it was…like magic!
We live in the Magic Kingdom. What a wonderful place to live in. We have a leader who is almost magical himself – Barack Obama. And we have a Congress that is expert at creating smoke and mirrors.
And the public? A bunch of yokels and rubes who will believe anything.
We can’t wait to see what happens today. Anything is possible!
The Christian Science Monitor has assembled a diverse group of the best economy-related bloggers out there. Our guest bloggers are not employed or directed by the Monitor and the views expressed are the bloggers' own, as is responsibility for the content of their blogs. To contact us about a blogger, click here. To add or view a comment on a guest blog, please go to the blogger's own site by clicking on the link above.