The Fed worshipers are nuts...

The Fatal Conceit of The Fed Worshipers
By, Chris Rossini

As everyone should know by now, the Fed "taper" has finally arrived. Yesterday, chief central planner Ben Bernanke announced that the Fed will slow down its bond buying from $85 billion to $75 billion per month.

In other words, the Fed is going to continue its job of printing funny money, and assisting in the misallocation of the economy's scarce resources. It's just going to (ever so slightly) slow down the pace in buying bonds. But the damage to the economy, and to our purchasing power, shall continue.

In our Libertarian/Austrian Economics neck of the woods, not much has changed. The Austrian Business Cycle Theory is still intact. Supply and Demand have not been abolished, and last but not least: It's still not different this time.

Yet, if you were to make your way through commentaries from the opposition, you'd think that Ben Bernanke has brought peace and harmony to the world with his ink machine. The Fed worshippers woke up, noticed that the Earth was still spinning and the Sun was still shining, and came to the conclusion that they always come to: Bernanke is The Hero!

Joe Weisenthal says "Ben Bernanke Just Mowed Down A Whole Bunch Of Haters" and "the economy is getting better, interest rates AREN'T exploding to the upside, and the stock market is more than handling this well (stocks are up nicely). Basically Bernanke just executed what a bunch of people said was totally impossible."

Barry Rithotlz says that Ron Paul "End The Fed"-types have something called "Central Bank Derangement Syndrome" because, rather than crash, the markets "took off".

Ambrose Evans-Pritchard says that "Quantitative easing has worked marvelously well. Monetary policy has been vindicated."

Matthew O'Brien says that "The Fed Tapered Perfectly".

All this hubris...and for what? The Fed has gone from counterfeiting $1 Trillion per year to $900 Billion. And after announcing this "perfectly" designed taper, the markets didn't collapse on the day of the announcement, or the day after.

Are these people serious?

Unfortunately, the answer to the question is "Yes". On the positive side of the ledger, we are serious too, and Austrian ideas are spreading very quickly.

At some point, the Fed will be forced to put an end to this non-recovery that is built entirely on a foundation of sand. This "taper" is virtually a non-event. The Fed is still very much in damage creation mode. Someday, the damages will have to be revealed for everyone to see. When that time comes, the Internet will have copies of both sides of the argument, in digital print, and dated.

I wouldn't want to be in the shoes of the Fed Worshipers.

Link:
http://www.economicpolicyjournal.com/2013/12/the-fatal-conceit-of-fed-worshipers.html