Joined Apr 19, 2009
721 Blog Posts

Recruiting the New Jacksonians

Aim Low for Bernake and Geithner, fellows!
"Aim Low for Bernake and Geithner, fellows!"

Greetings iBC’ers!  I’m happy to be aboard, and my thanks to Vincenzo for putting my banner together so quickly and artistically.    I chose the Andrew Jackson theme and quote because I think a healthy suspicion of our Central Bank and it’s various machinations is essential to any serious investor’s analysis of the markets– especially in these unprecedented days of fiscal and monetry expansion. 

“Old Hickory” was probably the last of our President who really got the whole “banks are trouble” business in a serious enough way to rail against those moneyed interests that sought a Central Bank to “coordinate” national economic policy.   Heck, his actions probably kept us out of a centrally administered Federal Reserve System for almost a century. 

But the Federal Reserve’s founding in 1913 is almost a century away now too, and I’m afraid the Beast from Jekyll Island is with us until we figure out some radically different economic system.  Frankly, I don’t see that coming any time soon.   No, the pragmatic investor has to work with the field he’s given, and that’s one where a central authority politically vested with a “stabilization” charter is calling the shots on money supply and, tangentially, short term interest rates.   Luckily, we’re  aware that these systems are run by fallible humans who make mistakes, and who are likely susceptible to the same blinding pressures to which any publically accountable bodies are prone.   Therein lies our “edge” — the predictability of the political animal — no matter the party reference.

Therefore, rather than treat the Fed like some sort of sinister Hand of the Illuminati out of a bad Tom Hanks picture, we should instead consider it a bumbling clown with sad faced white pancake, a violet polka dot tie and big red shoes.   Rather than fear the Fed, we should instead bank coin off its often predictable policy mistakes.   Truly, I don’t believe we have any choice but to do so, as the remaining option is to suffer the consequences of those mistakes like the well trained citizens of the Federal Reserve seal-pool within which we’ve all grown up.   

There is a road to serfdom, like Friedrich Hayek said, and it’s paved — like the road to Hell — with our own good intentions and public policy mistakes.  We need to navigate that road back towards independence — of thought and means — if we are to escape that destination.  While we’re at it, let’s make sure we’re well capitalized for the trip, no?

I look forward to discussing this further with you as we explore these and other far less serious themes in the weeks and months ahead.    I will leave off my first entry with one more quote from President Jackson, one that almost made my banner but for it’s length.   I think it fits our theme, especially if you believe the Fed to be about as independent of our Federal government as your pancreas is from your liver.  God bless, and thanks again for your support this week…

   “There are no necessary evils in government. Its evils exist only in its abuses.” — Andrew Jackson 7th POTUS


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