[Zakeet]

This economist thinks Bernanke may well have. Bernanke certainly followed the advice of Milton Friedman concerning what the FED should have been doing 1930-33 ...

... and that is exactly why this country is in such bad shape economically! Bernanke was fighting the wrong war!

[Our current economic problems] are not due to a lack of money available to lend, but to a lack of faith in the ability of borrowers to repay their debts. The Fed has gone about as if the problem is a shortage of liquidity. That is not the basic problem. The basic problem for the markets is [uncertainty] that balance sheets are credible. -- Anna Schwartz, Our central bankers and our Treasury Department are getting it wrong again, The Wall Street Journal October 18, 2008

Note: Anna Schwartz co-authored, with Milton Friedman, A Monetary History of the United States (1963), the definitive account of how misguided monetary policy turned the stock-market crash of 1929 into the Great Depression.

[JLS]

Well let’s see:

1. It is 2012 not 2008. I wonder what Dr. Schwartz thinks now not then.

2. The problems with our economy not unlike the 1930s include:

A. Over regulating business activity and thus reducing it.

B. New social program increasing business uncertainty and thus reducing business activity.

C. Looming tax rate increases.

Monetary policy has no power to change any of them.

3. The deep 1930-33 recession became the great depression due to a follow on recession caused FED action in 1937 THAT WAS IN RESPONSE TO PEOPLE WORRYING ABOUT A HUGE SPIKE IN INFLATION IF NOT HYPER-INFLATION. Does that sound familiar? In terms of the current timeline it would be a FED mistake in 2015 or so. Certainly some people are lobbying for another such mistake because of their concerns with the potential for inflation.