Testimony (and Hope): Day Two

Price increases are a manifestation of inflation and not inflation per se. This may appear a simple issue of semantics but it is not. You can have certain prices increase without inflation if there is a shortage or you can have inflation without prices increasing when productivity increases should push prices down but they do not because there is an increasing supply of money. Sen. Bunning was perfectly correct in what he was saying and in the longer term we would be well advised to listen to this bright man. But right mow we have a crisis and calming markets comes before setting long term goals. Applying now the "correct" solutions which Sen. Bunning is proposing is like stopping the firefighters from using their hoses because the water damage can be larger than the fire damage. It comes down to avoid making long term decisions under the pressure of an ongoing crisis. Hence, the frequent use of the word "temporary" is appropriate and desirable. The people in charge do understand by-and-large what is happening. However they may be falling for the usual all too human "Fatal Conceit" that Hayek so wisely warned us about. More specifically, Bernanke and Co. may believe that they do have the wisdom to direct the markets. Let us hope it is not so. But if it so, Sen. Bunning is correct to accuse them of socialist inclinations. After all, the main failure of the socialists (and communists) has been the hubris of pretending to be able to centrally "plan" their economies. That has been and will always be their undoing, not the terror which is nothing but the natural result of the attempt by the conceited and well meaning few to impose their "correct" views on the "unwashed" multitudes. My fears are for the aftermath of the fire, once it has been extinguished. Will the same people offer the right solutions which Sen. Bunning is articulating? I doubt it because it would mean diminishing their own power which, once tasted seems to be adictive beyond control.

All the Kings Horses and All the Kings Men BUY GOLD.

What is needed is leadership out of Washington. Some with simple common sense, not of the Greenspan kind. http://pacificgatepost.blogspot.com/2008/07/where-is-economic-leadership.html

Brian, You are delusional! Doing their jobs...? Members sat and read staff prepared questions to which Big Ben and others responded without notes. I would be surprised in the members I saw could ask an intelligent question about the economy. Everyone started the same way: my folks and all Americans are suffering. Well Congressman - no they're not! Those who believe in a free lunch and easy credit are suffering. Those who live within their means and EXPECT nothing from their government aren't doing all that badly. I turned off this depressing show of really bad political theatre. I can't believe the arrogance and ignorance displayed in these hearings by the members. They still have no idea that the - spend to correct - process is, as we see with Social Security, a Ponzi scheme from which we will all ultimately suffer. These hearings are a first-hand indication of our continuing move toward centralized planning - uh I think it is called Socialism.

This is an unparalleled scheme from the Bush Administration to drain the last accounts of the US Government. The War in Iraq has been cast with a blank check for billions every month, and now the Administration wants the US Tax accounts to be available. What tipped me off was William Ackman's note that FNMA/FDMC are only in trouble due to trading in options that are not needed by the market. If they were to be converted to another form, this whole mess would disappear. The Bush Administration is using the fear of evaporating markets, and its effect on US homeowners to get at the Tax account. I only hope that the American people realize this and are able to stop this robbery. I would not be surprised if in the near future many, many of the Administration's staff are brought to justice for fraud and high financial abuses.