Make sure to check out Bob Murphy's latest must read post taking a look at THE BIG PICTURE!
While it's fun, geeky, and necessary to argue about credit vs. money, I think we should also occasionally take a big step back and look at the broad themes. In a recent post, I said that the best way to predict what was coming--and how to protect your household--was to imagine that you were in control of the world governments and central banks, and had no conscience. I challenged Robert Wenzel to throw us a bone, but apparently if you want something done...
One disclaimer before I get going. I am not saying the following are my official predictions, and of course a lot of what I do below is post-dicting (not predicting). Furthermore, I am aware that an insane person has quite rational beliefs and theories; it's just that he sees spurious patterns everywhere. (That's what really happened to John Nash, if you read the book and don't trust Ron Howard's entertaining but absurd interpretation.) But even if the below is a little off in some of the specifics, it is the type of analysis of which we need a lot more. If the below is right, if only in spirit, then it's pointless for us to ponder what the "right" Fed move is, vis-a-vis the payment of interest on reserves. Bernanke isn't implementing what he thinks is best for the US economy, and so that academic question is as relevant as arguing about whether the Fed should allow casual Fridays at its offices.
THE BIG PICTURE
===============If I were extremely rich and powerful, and had absolutely no conscience, this is what I might do:
* I'd have a very popular and trusted Fed chair all of a sudden prime a massive bubble in the world economy. Then, just as it was about to crash ... Continue The Big Picture »»
