In an article published yesterday by the Wall Street Journal, Did the Fed Cause the Housing Bubble?, David Henderson continues the practice of pulling the wool over the eyes of the public.
He claims that M1 and M2 fell in the early part of the decade, showing (he says) that the Fed did not dump new money into the money supply.
His claim is highly deceptive, particularly since he also claims that China and other foreign investors saved dollars as further evidence for his argument. The reason this is deceptive is that M1 and M2 do not measure most foreign dollar holdings!!! M3 (discontinued by the Fed in 2006) measures the true money supply much more accurately. Only M3 includes time deposits, institutional and individual money-market funds, and short-term repurchase agreements. In other words, unless the money actually gets spent at a cash register or sits in a checking account, Henderson doesn't count it! What rubbish!
Henderson also protests, "Moreover, if the Fed was the culprit, why was the housing bubble world-wide? Do Mr. Greenspan's critics seriously contend that the Fed was responsible for high housing prices in, say, Spain?"
Yes, of course the Fed bears responsibility in Spain! The Fed controls the dollar, and the dollar serves as the official reserve currency for the entire world-wide currency supply ever since Bretton Woods. What the dollar does (and what the Fed does) directly influences what the other fiat money central banks do, including the Bank of Spain. His claim that the Fed has no influence over real estate in Spain borders on the absurd and intends to deceive the uninformed, not to enlighten them.
Bear in mind that China recently called for ending the dollar as the reserve currency in the world fiat money system during the upcoming G20 meetings, which President Obama as reported in a Wall Street Journal article strongly protested. Did China call for such a change just to be mean-spirited? No, they did it because they're terrified that the huge amount of dollar-based savings they already have will lose value dramatically as the Fed continues to expand the money supply, savings which serves as the reserve for their own currency, the yuan, savings which...wait for it!...don't get counted by the author's (and the Fed's) biased way of measuring the money supply!!!
Henderson is full of it. Moreover, I'd be willing to bet that he knows it. I believe he intentionally tries to continue the snow job that the Fed, the government, and their supporters have dumped on us for decades. Like so many before him, he deliberately uses smoke and mirrors to deceive the public.
©2009 Walt Thiessen, all rights reserved. You must have written permission from the author in order to republish this work.
Published: Friday, March 27, 2009
Last modified: Friday, March 27, 2009
The views expressed in this article are those of Walt Thiessen only and do not represent the views of Nolan Chart, LLC or its affiliates. Walt Thiessen is solely responsible for the contents of this article and is not an employee or otherwise affiliated with Nolan Chart, LLC in his/her role as a columnist.
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Reader Comments:
Posted By: gene
Date: 2009-03-27 12:41:47
Amen.
Posted By: Rhode to Surfdom
Date: 2009-03-27 13:51:00
Walt,
Excellent points...I agree 100% that if we truly want to solve monetary problems and expose the Fed for what it really is then M3 reports should be restored. The timing of this is important as well since Helicopter Ben primed the pump as soon as M3 disappeared.
I find it hard to believe that the American public won't begin to see things differently if these issues were raised by the MSM. Too bad folks like David Henderson embody what is printed and reported. Alternative media is left as the voice in the wilderess. At least we have the internet and other outlets to disseminate the truth.
Posted By: Jack Lohman
Date: 2009-03-28 06:27:33
And I love this one: The bankers met with Obama to tell him they don’t like the government changing the rules halfway into the game.Jack LohmanIsn’t that sort of like, uh, their adjustable rate mortgages? You know, their bait-and-switch loans whose rules change halfway into the game?
MoneyedPoliticians.net
Posted By: Jake, the Champion of the Constitution
Date: 2009-03-29 03:23:52
This is the nature of the people who are engaged in a massive cover-your-*** operation. I was at a Joseph Stiglitz lecture, Nobel laureate 2001, in Shanghai - what a bunch of Keynesian hot air!!