Our Federal Reserve has reached the point of almost complete dereliction of duty. With its reckless monetary policy, it has flooded the world with dollars and liquidity, undermined the world’s reserve currency, driven investment off America’s shores, misallocated enormous flows of capital to commodity speculation, and will ultimately be the leading culprit in defrauding dollar denominated bondholders on a worldwide basis. This is a moral threat to property rights of enormous proportions. The world is not stupid. Investors are moving to protect themselves and possibly to free themselves from the weakening dollar standard.
Meanwhile, “experts” such as President Obama and Bill O’Reily blame speculators for the inflation of oil prices. If they knew what they are talking about they should place the blame where it belongs–with the misguided policies of our Federal Reserve and Treasury, which have provided enormous incentives to hedge against the weak dollar. Just one example: The University of Texas endowment has recently moved $1 billion into gold bullion, a pretty big bet against the U. S. dollar.
Another looming problem: the average maturity of U. S. debt is just over three years, down from six years about 20 years ago. And this while we are printing money and issuing new debt like crazy. This is long-term financial mismanagement and will come back to haunt us when the artificial suppression of rates ends and we must refinance at much higher rates.
And now Congressman Barney Frank wants to eliminate the independence of the Federal Reserve, remove the policy involvement of its regional banks, and “democratize” its open market operations. Fed governance is bad enough already; can you imagine a bigger disaster than having Congress dictate monetary policy?