"Assigning the Blame" by Martin Hutchinson of Asia Times says that the real culprit behind the horrific global economic crisis is Federal Reserve Chair Ben Bernanke - who is now unleashing the Fed's printing presses to flood the world with dollars - one more person who caused the crisis applying the "cure". He claims that Wall Steet was merely responding to the Fed's actions and that collectively this is the reason for the whole mess.
Only two years ago, Fed chairman Ben Bernanke was proclaiming a "Great Moderation" by which improved monetary management capability by the Fed and other central banks had caused a permanent decrease in the volatility of the global economy, with inflation remaining low while growth continued at a steady pace. The only disturbing factor was a mysterious "savings glut" in Asia, which was causing balance of payments imbalances and might conceivably prevent the capital markets from accommodating ad infinitum the worthy consumerism of the US public.
As we now know, this analysis was unadulterated hogwash. Far from producing a "Great Moderation", the Fed's excessively lax monetary policy over the past decade has produced the most dangerous global recession since the Great Depression. Far from being the world's chief problem, the Asian "savings glut" was the result of uncontrolled US money printing and balance of payments deficits - and that glut may now be the principal factor allowing the world to escape the current troubles without repeating the experience of the 1930s.
Comments