In the course of explaining why, as Business Insider headlines it, “Not Even Gold Will Save You From What’s Coming,” analyst Marc Faber said something interesting about monetary policy:
When you print money, the money does not flow evenly into the economic system. It stays essentially in the financial service industry and among people that have access to these funds, mostly well-to-do people. It does not go to the worker. I just mentioned that it doesn’t flow evenly into the system.
Now from time to time it will lift the NASDAQ like between 1997 and March 2000. Then it lifted home prices in the U.S. until 2007. Then it lifted the commodity prices in 2008 until July 2008 when the global economy was already in recession. More recently it has lifted selected emerging economies, stock markets in Indonesia, Philippines, Thailand, up four times from 2009 lows and now the U.S.
So we are creating bubbles and bubbles and bubbles. This bubble will come to an end. My concern is that we are going to have a systemic crisis where it is going to be very difficult to hide. Even in gold, it will be difficult to hide.
Currency manipulation puts money in the hands of well-connected rich people, not workers? That’s odd. The Administration of our Class-Warrior-In-Chief, President Barack Obama, is very big on this sort of dollar-spewing, “debts are no problem because we buy our own debt” approach. But he never describes it as a process that ends up with money in the hands of the wealthy, from which it’s expected to… what’s the phrase again? Ah, yes: “trickle down”… to the working man.
That’s not the first time such an observation has been made about President Obama’s policies recently. A couple of weeks ago, Tim Carney of the Washington Examiner said as much about “Obama’s implementation of the Wall Street bailout, the government-funded rescue of Chrysler and General Motors, and a stimulus bill that threw money at the likes of General Electric and Bechtel, on the theory that the money would trickle down to American workers.”
Carney also mentioned Fannie Mae and Freddie Mac, which “operated for decades as slush funds for politically connected operatives to get rich by inflating the housing bubble”; the Export-Import Bank, which “supports exports by lending taxpayer money or guaranteeing private loans to foreign buyers of U.S. goods”; and subsidies to companies such as Boeing, IBM, General Electric, and huge biotech firms, all of which can be found in the Senate Democrats’ budget proposal.
And let us not forget that all of Obama’s big-bucks “green energy” losers were large corporations run by very rich people. That’s a whole lot of “trickling down.” And unlike the hoary old slander directed at the successful policies of the Reagan years, it really is premised on the idea of handing piles of confiscated money to rich people, and hoping they will use the funds in a way that causes benefits to “trickle down” to lower income echelons. Growth-oriented tax cuts allow people to keep their own money, but somehow that’s considered less virtuous than seizing or borrowing the loot and re-distributing it.
Which makes no sense at all, unless you assume that the central planners doling out these subsidies, “stimulus” payments, and quantitatively eased dollar bills are far better investors than those who earned the money. (And even then, you must believe that the social good derived from such redistribution trumps the moral offense of confiscating property from its rightful owners.) Has anyone seen any sign of such dazzling investment success from the realm of top-down politically controlled trickle-down quantonomics?