More terible news from the Fed

FRB: Press Release-- Federal Reserve Announces Purchases of Direct Oblications from GSEs - November 25th, 2008

The Federal Reserve announced on Tuesday that it will initiate a program to purchase the direct obligations of housing-related government-sponsored enterprises (GSEs)--Fannie Mae, Freddie Mac, and the Federal Home Loan Banks--and mortgage-backed securities (MBS) backed by Fannie Mae, Freddie Mac, and Ginnie Mae. Spreads of rates on GSE debt and on GSE-guaranteed mortgages have widened appreciably of late. This action is being taken to reduce the cost and increase the availability of credit for the purchase of houses, which in turn should support housing markets and foster improved conditions in financial markets more generally. Purchases of up to $100 billion in GSE direct obligations under the program will be conducted with the Federal Reserve's primary dealers through a series of competitive auctions and will begin next week. Purchases of up to $500 billion in MBS will be conducted by asset managers selected via a competitive process with a goal of beginning these purchases before year-end. Purchases of both direct obligations and MBS are expected to take place over several quarters. Further information regarding the operational details of this program will be provided after consultation with market participants.

Whoo hoo!!! My mortgage is being paid for by EVERYBODY now! Ok not really, I was thrifty and didn't buy what I couldn't afford, so I'm in the clear. Nevertheless, once again the Fed proves they need to be eliminated. I just don't see how monetarists can think that their ideas work.

My new blog...

i have begun a second blog for spreading ideas about political and economic liberty from a Christian point of view. I have been compiling ideas for posts, and I'll begin rolling them out in the near future. I'll be posting essays I have written, things to ponder, exegeses on Scripture, movie and book reviews, article links, and musings on current events. So far, I have been collecting some of my own writings and getting them ready to be posted here. Some of them can be rather long for a typical blog post, and I anticipate dividing them into multiple sections.

It will be quite different from what I normally write on this blog, but some of what I would you see here will henceforth be on the other blog. So take a look, read a little, and add it to your RSS feed reader!

Link: The Christian Libertarian.

Is this the end of the American economy?

Bloomberg: Fed Pledges 7.4 Trillion in New Money.

This is it. The Fed has declared war on the economy and thereby every market participant, and they have prepped their weapons of mass destruction.

Quoting the article: “The U.S. government is prepared to lend more than $7.4 trillion on behalf of American taxpayers, or half the value of everything produced in the nation last year, to rescue the financial system since the credit markets seized up 15 months ago. The unprecedented pledge of funds includes $2.8 trillion already tapped by financial institutions in the biggest response to an economic emergency since the New Deal of the 1930s, according to data compiled by Bloomberg. The commitment dwarfs the only plan approved by lawmakers, the Treasury Department’s $700 billion Troubled Asset Relief Program. Federal Reserve lending last week was 1,900 times the weekly average for the three years before the crisis.”

I already knew that 3 trillion in monetary expansion was in the works. I heard it live from the President of the Dallas Fed about a month ago when he came to Austin and talked about this “off the record”. I personally challenged him the about the wisdom of such a decision. I asked him how he could expect the same monetary policies that created this crisis could be used to solve it, and even if it did temporarily how he could expect that even in the mid-term horizon that the same problems would not occur all over again. He said in response, and I quote: “You just gotta have faith – faith in the Federal Reserve, faith in Congress that they will make the right decision, and faith in the Executive, whoever is elected, that he will make the right decision.”

I should have asked him how other faith-based initiatives have been working out for the government lately, or that I thought matters of faith should be reserved only for God, quantum mechanics, and the quality of frozen pizzas. Too bad I’m not THAT quick. Too bad I was too shocked to say anything at the time. Three trillion is disaster, seven trillion is… unspeakable.

They should have listened – to Mises, to Hayek, to Rothbard, to Ron Paul. Heck, even Milton Friedman more or less repudiated monetarism later in life. Instead, they chose Keynes, Stiglitz, Krugman, Greenspan, Bernanke, Paulson, McCain, and Obama. You reap what you sow.

Should The Government Stop Dumping Money Into A Giant Hole?

In The Know: Should The Government Stop Dumping Money Into A Giant Hole?

I'm giving a lecture on business cycle theory today. This seems relevant... Note: there is a smidgen of language...

LHC more likely to find a black hole for cash than a higgs boson

The Great Beyond: LHC repairs get pricier

More bad news from the Large Hadron Collider.

Repairing the damage from the electrical failure earlier this year will run to $21 million, according to the European Organization for Nuclear Research (AP). The original cost estimate for the repair was around $80,000, not including labour and the spares.

In addition, the particle collider will not be up and running before June. Previously it was suggested the particles could be whizzing round the ring by April (AFP).

“There is still a lot of work to do and we want to be sure that everything is in order before starting up,” says spokesman James Gillies (AFP / AP). “If we can do it sooner, all well and good. But I think we can do it realistically (in) early summer.”

Can you believe this garbage? This project originally cost the world economy about 10 billion dollars, an astronomical sum to say the least, and it isn't even getting close to accomplishing its mission. What a waste! This illustrates perfectly the problems of socialism -- that the central planners will tend not to choose projects that actually produce new goods and services efficiently because there is no adequate way to count the costs.