Helicopter Ben Earns His Wings

321gold ^ | Sep 21, 2007 | Peter Schiff

[vietvet67]

Coming at a time when rate increases were needed to combat the sinking dollar and surging gold, oil and other commodity prices, Ben Bernanke's 50 basis point cuts in the Fed funds and discount rates this week may go down as the most irresponsible move in Fed history.

To America's creditors around the world, whose mountains of dollar reserves will be debased by lower rates in the U.S., this action amounts to the monetary equivalent of "let them eat cake." My prediction is that rather than doing so, they will just throw it back in our faces, and refuse to continue funding our deficits.

Wall Street bulls have heaped praise on the Fed, at times calling the rate cuts courageous and brilliant. From their response, you would have thought that Bernanke's solution was akin to Einstein's breakthroughs on relativity. In the first place, what is so brilliant about cutting rates? My five year old could do it and would gladly accept payment for his service in popsicles.

Furthermore, a fifty basis point cut was not an act of bravery but one of cowardice. The brave thing to do would have been to raise rates and allow market forces to purge the economy of the imbalances built up during the Greenspan bubbles. It would have taken some real courage to level with the American public and let them know that our profligacy has consequences, rather than pretending it can ride to the rescue with a wave of its magic wand and a crank of the printing press.

If Bernanke really had any guts he would have assured our creditors that they will be repaid with real purchasing power, and that the Fed was willing to put some teeth in our alleged "strong dollar policy".

[JimRed]

321gold.com? Trying to sell gold; lower interest rates don’t help.

[Mr. K]

whats with these people??? lower the interest rates to 3% and watch the US economy take off!

[Always Right]

The smart money is going long on the dollar and long on the stock market the rest of the year. The dollar is near its bottom and stocks are primed to take off. The US economy is good shape. Thank you Ben!

[Mr. K]

I agree- cut the interest rate to 3% and FREEZE GOVERNMENT SPENDING AT 2007 LEVELS (let the stupid democraps try to explain how this is a ‘cut’)

we will grow our way out of a deficit in 3 years, and then the 3% rates will be perfect because GOVT is no BORROWING SO MUCH DAMN MONEY

[Always Right]

If the GOP congress would have controlled spending, they would still be in power and in fact would have increased their majority.

[kittymyrib]

LOL...well, this apple certainly didn’t fall far from the tree. Peter Schiff is the son of the kooky Irwin Schiff, who made a fortune selling his notion to the unsuspecting that they did not have to pay income taxes. He went to prison after getting his followers into mucho trouble with the IRS.
Wikepedia says that Peter is known for his “extremely bearish” view of the US economy, and oh yes, he sells gold...surprise, surprise.

[Travis McGee]

"If recession should threaten serious consequences for business (as is not indicated at present) there is little doubt that the Federal Reserve System would take steps to ease the money market and so check the movement."

---Harvard Economic Society, October 19, 1929

[RedStateRocker]

Do I have time to get my tinfoil hat on before the rest of the gloom and doom gold bugs arrive?

[Psycho_Bunny]

This isn’t what Chopper Dave is saying...

[JasonC]

He was short.

Some things are simple...

[Mr. K]

yes!!!!!!!!!!!!

[Ramius]

Have you considered Gold foil? It’s better. :-)

[Always Right]

"If recession should threaten serious consequences for business (as is not indicated at present) there is little doubt that the Federal Reserve System would take steps to ease the money market and so check the movement." ---Harvard Economic Society, October 19, 1929

Unfortunately in 1929 the fed did not act and our gold based currency kept the money supply low.

[vietvet67]

“In the absence of the gold standard, there is no way to protect
savings from confiscation through inflation. ... This is the shabby
secret of the welfare statists’ tirades against gold. Deficit spending
is simply a scheme for the confiscation of wealth. Gold stands in the
way of this insidious process. It stands as a protector of property
rights. If one grasps this, one has no difficulty in understanding the
statists’ antagonism toward the gold standard.” - Alan Greenspan

[PugetSoundSoldier]

"If recession should threaten serious consequences for business (as is not indicated at present) there is little doubt that the Federal Reserve System would take steps to ease the money market and so check the movement."

---Harvard Economic Society, October 19, 1929

And that is EXACTLY what the Fed did back then. It was FDR's "New Deal" that turned a recession that would have been on the order of what Reagan inherited from Carter into the Great Depression, and extended it another 8-9 years.

The Fed at that time had it right; it was the "gotta do SOMETHING!" politicians that changed a mid-level recession into the Great Depression.

[JimRed]

“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. ... This is the shabby secret of the welfare statists’ tirades against gold.

Please note that my comment was not directed against the gold standard, but merely observing the self interest of a web site which sells gold.