Thursday, March 06, 2008

Price Controls in a Capatalist Society.

So just what is the Federal Reserve doing in lowering interest rates in the face of sky-high inflation. Stated another way, why is the Fed debasing our currency? Who are they really trying to assist? It seems that we have entered a new type of economy, what I would like to call an Asset-Command Economy. I remember that for years, we would preach to the Soviet Union that price controls don't work, because only the market can set an efficient price and match production with demand. Yet here we are, less than 20 years after the collapse of the USSR, also establishing price controls. Only we are not setting price controls on shoes, tvs or oranges. The Fed is trying to establish price controls on Asset Prices. Don't believe me? Why is Henry Paulson stating that he doesn't believe that houses will return to "historical prices", i.e. they will not fall sufficiently to fall in line with incomes. What business does the Secretary of Treasury have in trying to state his beliefs or ideas about where r/e prices should be? Is he really any better than any communist trying to control the price of lettuce? Will he have a better result? Instead of trying to tip off his GS buddies about brewing trouble in the MBS market so they can go short, perhaps he should have been telling the people not to get so over indebted. But perhaps that is not good for the The Street. To get back to my original question, the answer is clear. The major beneficiary of Bernanke's ridiculous inflationary policies is the Wall Street Cartel. Capitalism without Capital is just an ism! Without the banking sector, obviously it would be nearly impossible to do business in the US; hence, goes the argument they should be bailed out AT ANY COST! It is written that Mr. Bernanke is a student of The Great Depression. But perhaps I can suggest to him that he should read how other countries were doing at that time. How did it go with Russia, Germany, France, Japan or Italy? During those turbulent time, other great nations turned to fascism, imperialism and communism, but we persevered! Before Mr. Bernanke goes full throttle with the printing machine to prove his pedagogical theses, perhaps he can consider how many regular Americans will be destroyed by his policies. To conclude I will leave with a few quotes by Lenin:

"There is no surer way to destroy a Capitalist than to debauch his currency"

"We will destroy the Bourgeoise by grinding them in the millstone between inflation and taxation"


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