Fed move implications

The creation of over $1 trillion in money announced by the Fed demonstrates the difference between parasitism and labor. The world’s exporters earned their dollars by — labor — a tough concept these days in the West. The United $tates government on the other hand earns dollars by printing them.

Oddly, and as Krugman has noted in wonkish comments, the thing about pushing with a string, the nature of this liquidity trap could just be that a dollar of Fed action results in less than a dollar in non-Fed, non-government private sector action.

Bernanke is out there buying everything financial that exists, so perhaps the real problem is a shrinking sector of vanilla business.

Bernanke acts and auto loan rates perversely go up. Bond-traders bundle bonds to avoid regulation. He now says he was acting to aid the private sector lending,(1) but of course there are implications for the dollar bubble.

MIM has not written much on the topic of how bureaucratic capital forms in the united $tates, because it is contrary to previous theory.

1. http://www.bloomberg.com/apps/news?pid=20601087&sid=aAWzQMDmmdhk&refer=home


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