Fed's Easy Money Policies Will End Badly: Opinion
Globally, central bankers, who meet every other month in Basel Switzerland, have cooperated to pump more than $11 trillion in new money into a global economy since the financial crisis began.
One does not need a PhD in economics to understand the dangers of that much new money chasing goods in a slow growing economy, especially one impeded by so many structural impediments to growth.
Europe is entering a second year of recession, burdened by unresolved dysfunctions imposed by a single currency. In China, the efficacy of mercantilism and crony capitalism is wearing thin, similar to Japan's experience two decades ago.
U.S. growth labors under the psychological burdens of endless budget stalemates and an Administration obsessed with extending entitlements and taxing success instead of addressing the economy's flagging international competitiveness.Therein lies the terrible tragedy: Economists that head central banks well know easy money can't overcome flawed government policies and solve the tragic legacy of the financial crisis -- chronically high unemployment in the United States and Europe. And blessed with considerable political independence, central bankers are in the best position to point out the failures of national policies to address structural dysfunctions. Instead of speaking publically and firmly about those problems, central bankers appease political leaders, who demand easy money to paper over their excesses and failures. Ben Bernanke and other central bankers, like promiscuous parents, compensate and indulge political leaders acting irresponsibly in their stewardship of national economies. Sooner or later spoiled children turn out badly, and economies juiced with too much money have their bubbles, inflation and collapse. This will all end badly. Follow @pmorici1 This article was written by an independent contributor, separate from TheStreet's regular news coverage.
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts