Welcome to the Fed's Magic Kingdom!
Do you believe like I believe,
Do you believe in magic
鈥� The Lovin鈥� Spoonful
Whew! What fun we had last week! It鈥檚 the Magic Kingdom for sure.
The Fed pulled a white rabbit out of its hat on Wednesday 鈥� a $600 billion mad hare. Stocks soared on Thursday. Commodities soared. Everything soared. Except the dollar. People dropped the buck.
Then, on Friday there wasn鈥檛 much follow through. The Dow rose only a few points. Gold continued going up 鈥� $14.
What鈥檚 ahead for this week? Heck, anything could happen. This is the Magic Kingdom.
What do we mean? Of course, counterfeiting is against the law.
The counterfeiter creates money that looks just like the real stuff, but it has no gold or other backing behind it.
The Fed creates money that looks just like the real stuff. It has no gold or other backing behind it either.
What鈥檚 the difference? You go to jail for counterfeiting. But by some magic, it鈥檚 okay when the Fed does it.
We have a suggestion. The Fed could save some money by giving up its monopoly on counterfeiting. Allow the private sector to create new money. There are probably plenty of people in jail today who could make useful contributions to our economy. These guys know how to print money. Let them out! They would create money 鈥� lots of it. At no cost to the taxpayer.
But wait, the feds want to control the counterfeiting process. They don鈥檛 want too much or too little. But just the right amount of new money.
How much is the right amount? Who knows? Between now and June 鈥�11, the Fed will add another $600 billion to the $1.7 trillion it already put into the system. Is that enough?
Darned if we know.
We got a message from debt-tracker prof. Laurence Kotlikoff at Boston University. He told us that the money supply would be multiplied 4 times since 2007. Is that enough?
The whole thing would boggle our mind. But our mind was already boggled by the Fed鈥檚 last trick.
The Fed increased the world鈥檚 wealth by $1.7 trillion last year. That鈥檚 a lot of money. What did it mean? Presto, the world was richer. Right? If the world wasn鈥檛 richer, the extra money was a hoax, a fraud, and a scam, right?
But if it really did create $1.7 trillion worth of money鈥epresenting real wealth鈥ell, it was鈥ike magic!
We live in the Magic Kingdom. What a wonderful place to live in. We have a leader who is almost magical himself 鈥� Barack Obama. And we have a Congress that is expert at creating smoke and mirrors.
And the public? A bunch of yokels and rubes who will believe anything.
We can鈥檛 wait to see what happens today. Anything is possible!
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