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Business/Finance See other Business/Finance Articles Title: Stockman: Economic Coup d’etat Underway Stockman: Economic Coup d’etat Underway For several years now, a small group of Keynesian academics and hacks have seized nearly absolute financial power. They’ve used the Fed’s printing presses to justify the lunacy of unending zero interest rates (ZIRP) and massive quantitative easing (QE) on the grounds that there is too little inflation. The bureaucrats at the IMF even invented a lamebrained catchphrase, calling the so-called scourge of money that retains most of its value “lowflation.” This whole consumer inflation-targeting scheme is an inherently preposterous notion. There is not one scrap of evidence that 2% consumer inflation is better for rising living standards and societal wealth gains than is 0.2%. And there is much history and economic logic that points in exactly the opposite direction. Between 1870–1913 in the United States, real national income grew at 3.5% per year. That was the highest gain for any 43-year period in history. Yet the average inflation rate during that long period of capitalist prosperity was less than 0%. That was real “lowflation.” And it was a blessing for the average worker, not a scourge. The core consumer price inflation (CPI) for the 12 months ending in January rose by 2.21%. But last week, the Bureau of Labor Statistics (BLS) revealed we’re not experiencing that healthy “lowflation.” The core consumer price inflation (CPI) for the 12 months ending in January rose by 2.21%. And that’s actually a tad higher than the 1.98% annual average since the year 2000. The point is there isn’t an inflation deficiency problem, and there never has been. The whole 2% inflation mantra is just a smoke screen to justify the massive daily intrusion in financial markets by a power-obsessed bunch of monetary central planners. They made it up and then rode it to ever increasing dominance over the financial system. As recently as 15 years ago, the 2% inflation theory was unknown outside a small circle of neo-Keynesian academic scribblers led by Ben Bernanke. In fact, the whole cockamamie theory was explained in an obscure book called Inflation Targeting, issued on Nov. 23, 1998, by Bernanke and several obscure academic power-grabbers. You can look it up. The book stands at No. 2,503,823 on Amazon’s sales ranking! Yet inflation targeting is now accepted as gospel by the financial press. It’s not hard to understand why. Wall Street loves it because it justifies massive liquidity injections and stock market boosting by the central bank. The lazy journalists who feed the Street with so-called financial news just repeat the mantra and pass it along unexamined. Look at this gem from Dow Jones MarketWatch: Although too much inflation is viewed as dangerous for the economy, Fed officials think that a 2% inflation rate is best for the economy to grow. Inflation has been trending below that target for the past four years. Low inflation is a signal of weak demand in the economy and raises fears of actual decline in prices or deflation, which can damage an economy, especially one with high debt burdens like the United States. This is destructive nonsense. Below, I show you how we got to this point and where all this madness is headed. You won’t like it... but you need to know what the elites have in store for you and your money. Read on. Best, David Stockman for The Daily Reckoning Post Comment Private Reply Ignore Thread
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