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Bernanke’s Subsidies: Houses and Cars

Written by Gary North on February 25, 2013

“The Federal Reserve has only two policies: inflation and blarney.” — Franklin Sanders

What happens when the Federal Reserve promises to create $1 trillion in fiat money per year, and then starts by buying long-term Treasury bonds and Fannie/Freddie bonds?

Interest rates go up.

Wait a minute. Weren’t interest rates supposed to go down? Yes, they were. That is what Keynesian economics teaches. Problem: Keynesian economics is wrong.

MortgageRates2013

http://finance.yahoo.com/news/national-mortgage-rates-jan-10-080154134.html
But Bernanke and the FED will move forward, inflating on a scale undreamed of prior to 2008. That is the only trick it has up its collective sleeve. “When in doubt, inflate.” That is alpha and omega. That is the law and the prophets.

Lock in that mortgage rate.

Continue Reading on www.bloomberg.com

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One thought on “Bernanke’s Subsidies: Houses and Cars”

  1. February 26, 2013 at 08:20
    Texas Chris says:

    "We didn't print enough."

    I can feel it coming. Somebody give the Bernanke a mic…