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Bubble Watch: Obvious to Billionaires, Invisible to the Fed –
TND Guest Contributor: Paul-Martin Foss |
How do you know that the Federal Reserve is blowing huge asset bubbles? When Fed officials deny that bubbles exist. It doesn’t matter that anyone with half a brain can see the unsustainable rises in all sorts of asset prices. It doesn’t matter than anyone who buys food, pays rent, or drives a car sees prices rising all around them. Nor does it matter that those who have benefited the most from the Fed’s money printing both acknowledge the bubbles and see an opportunity for making money from them. The Fed just continues to stick its head in the sand.
Billionaire investor Jeff Greene was interviewed last week on CNBC regarding the existence of asset bubbles, and he was quite candid about how the Fed’s money creation has benefited the super-wealthy such as himself. Greene made his billions by recognizing the housing bubble in 2006 and successfully shorting the housing market. He now realizes the bubble that the Fed has created in real estate through the Fed’s quantitative easing programs, and especially the bubble in high end real estate. Whether Greene is able to sell the luxury homes he has purchased for as much as he is asking remains to be seen, but that is more the result of his business acumen at timing the top of the market than his ability to see the existent bubble. And Greene sees the connection not just with real estate, but with stock markets. When central banks print money, stock prices rise.
Contrast this with Jerome Powell, a member of the Board of Governors of the Federal Reserve System, who doesn’t believe that stock prices are in a bubble. It’s funny how the Federal Reserve, the institution that pumps this money into the financial system, is never ever aware of the effects of its inflationary policies. Fed decision-makers never see the bubbles until it’s too late, nor do they realize that the economy is in recession until after it’s well underway. The super-rich get to benefit by investing with cheap money, while the rest of us get stuck with the bill.
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About Paul-Martin Foss:
Paul-Martin Foss is the founder, President, and Executive Director of the Carl Menger Center for the Study of Money and Banking, an Arlington, VA-based think tank dedicated to educating the American people on the importance of sound money and sound banking.
Prior to founding the Menger Center, Mr. Foss worked in the U.S. House of Representatives for seven years, including six years as Congressman Ron Paul’s legislative assistant for monetary policy and financial services, and one year as Deputy Legislative Director for Congressman Thomas Massie.
As Congressman Paul’s legislative assistant, he assisted the Congressman in his duties as Chairman of the Subcommittee on Domestic Monetary Policy by helping to develop hearing topics, agendas, and briefing Congressmen and their staffs on monetary policy topics. Mr. Foss also was responsible for the management of Dr. Paul’s monetary policy and financial services legislation, including the “Audit the Fed” and “End the Fed” bills, and was co-editor of Ron Paul’s Monetary Policy Anthology, a multi-thousand page compilation of hearing transcripts, lecture transcripts, and other documents related to Dr. Paul’s chairmanship.
Mr. Foss received his Bachelor’s degree from The University of the South (Sewanee), and Master’s degrees from the London School of Economics and Georgetown University’s Edmund A. Walsh School of Foreign Service.
This article appeared on the Carl Menger Center for the Study of Money and Banking and is reprinted with permission, “Creative Commons 4.0.”
Source: http://thenewsdoctors.com/bubble-watch-obvious-to-billionaires-invisible-to-the-fed/
