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The Mont Pelerin Review's avatar

I enjoyed your piece, and the last line was pretty funny! I thought the Fed slayed the dragon of stagflation under Volker, but I'm sad to see it coming back. The Fed will have to make tough choices, and I'm honestly not sure what the right move is. Hopefully, Trump backs down from his tariffs.

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Spencer's avatar

This is also the reason why we had the GFC, as predicted in May 1980. As Leonard Da Vinci explained:

"My intention is to consult experience first, and then with reasoning show why such experience is bound to operate in such a way”…”Although nature begins with the cause and ends with the experience, we must follow the opposite course, namely being with the experience, and by means of it investigate the cause…“Before you make a general rule of this case, test it two or three times and observe whether the tests produce the same effects”.

I.e., Bankrupt-u-Bernanke thought money is neutral. As Dr. Leland Pritchard said: "There is no possible way for the Fed to get a “handle” on the money supply unless it has (and properly exercises) direct control over the volume of legal reserves, and the reserve ratios, of all money creating institutions. This the Act, the DIDMCA, did not provide.

Then Greenspan dropped legal reserves by 40 percent. The GFC was inevitable.

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