Mish: Instead of having dinner with those that caused the problem and have no idea how to fix it, the powers that be should have instead sat down with the top 20 economic bloggers as to what to do. We have been warning about these problems for years.
Volcker, for his part, says the current crisis has its roots in the lack of restraint inherent in the highly leveraged system that evolved, one in which winners were rewarded exorbitantly but the inverse didn't seem to hold.
"The first panacea for a mismanaged nation is inflation of the currency; the second is war."
-- Ernest Hemingway, Esquire magazine, September 1935
"Price stability is something which is essential for the poorest and the most vulnerable of our citizens. They cannot protect themselves against inflation. It is extremely important that we understand that moderation today is necessary if we want to deliver price stability in the medium term."
- European Central Bank president Jean-Claude Trichet, April 2008
A little bit of fuzz...
A little bit of fuzz...just to keep us from being sure, that there is going to be an inflation.
Make it look like someone actually argues, as if there was another choice. Just to keep us scared, that the sky is going to fall straight into bottomless pit of deflation.
"Managing the inflation expectations", by making us expect the deflation.
FED monster has only one weapon, - inflation. It is absolutely powerless to assist or to even tolerate deflation. Too many friends, too many liabilities. But the trick is, to make us to expect the blow by the non-existing weapon of the FED - deflation. I'd like to see who in the FED would have enough cajones to face the congress, when congress faces default. Surely, it ain't Helicopter Ben.