Rising food prices and the Fed's shady alibi
The Fed says it's not to blame for rising food costs. But could its money printing be a cause?
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In other words, yes…the developing world is growing. It has been growing at a high rate for the last 20 years. Nothing new there.Skip to next paragraph
Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind The Daily Reckoning (dailyreckoning.com).
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What’s new is that central banks are printing money at a record pace. They are creating more bubbles.
Isn’t this going to end badly? Why would governments play such a dangerous game? Aren’t they putting their own credibility, currencies and solvency in jeopardy?
Yes, of course they are…
But there is something you have to understand. Governments always look out for the elite groups that control them. They’re not necessarily concerned with the betterment of humankind…or even the best interests of their own people.
Here’s an example, from The New York Times:
Public deficits and debt relative to gross domestic product have ballooned in the last three years for one simple reason – the big banks at the heart of our financial system blew themselves up. On this point, the conclusions of the Financial Crisis Inquiry Commission, which appeared last week, are very clear and utterly compelling.
No one forced the banks to take on so much risk. Top bankers lobbied long and hard for the rules that allowed them to behave recklessly. And these same people effectively captured the hearts, minds and, some would say, pocketbooks of the regulators – in the sense that a well-regarded regulator can and often does go work for a bank afterward.
Meanwhile, Barry Ritholtz says the feds are using Fannie and Freddie as another way to shovel taxpayer money to Wall Street. As you know, the Fed already plays Sugar Daddy to the bankers. If the bankers have some trash mortgage-backed security that they lost money on, the Fed buys it from them at an inflated price. Of course, just having the Fed in the market buying MBSs inflates the markets.
But it turns out, the Fed isn’t the only one. The US Treasury also gave Fannie and Freddie a blank check to save the housing industry. But they let the housing industry go bust. Instead, they took the money and saved the housing industry’s creditors. The big banks, in other words. Wall Street. The richest of the rich.
Why should taxpayer money be used to bail out the rich?
Well, they’re not just rich. They’re powerful. They’re the people the government was set up to protect. Give the feds a break; they’re just doing their jobs.
The private sector innovates. Government procrastinates…hesitates…and vegetates.
That’s just the way it works. That’s what government has always been for. The government of ancient Egypt protected the pharaohs. The government of the Ottoman Empire protected the Ottomans. The government of Genghis Khan looked out for Genghis.
And who does the US government look out for? Naturally, it looks out for the elite groups that control it. Who’s that? The big banks, of course.
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