Tag Archive for GDP

First Quarter: Temporary Slide or Precursor to the Plunge?

Fed Vice Chairman Stanley Fischer today said that weak growth in the US economy in the first quarter is likely only temporary, and that the Fed could continue on with its planned rate hikes. Time will tell whether he’s right or wrong, but there is so much evidence out there that the economy is dependent on central bank money printing for its continued health that we can’t help but think that Fischer really isn’t in tune with what’s going on. Once the central bank stock and bond purchases wind down, stock markets will lose their luster, markets will begin to panic, and in the absence of any further quantitative easing the malinvestments that have been propagated through a decade of easy money will eventually be brought to light. Fischer, like most economists of the past few decades, doesn’t understand the consequences of his actions because of his failure to believe the teachings of Austrian Business Cycle Theory. That disbelief is irrelevant, however, and the consequences of the Fed’s decisions will occur regardless. When they do, let this post be a reminder that the Vice Chairman of the most powerful central bank in the world didn’t see the crisis coming.

The Central Planning Mindset Has Won

Line for bread in Siberia.

Line for bread in Siberia.

If you thought the Soviet Union’s collapse meant the end of central planning, you were wrong. Central planning is alive and well. In fact, it’s even stronger now than it was during the Soviet Union’s heyday. What’s even more disturbing is that many who would strongly oppose Soviet-style central planning and who consider themselves to be defenders of free markets fail to recognize their acceptance of central planning and see no contradiction between their acceptance of central planning and their alleged support of the market economy.