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Wednesday, March 29, 2006

Misallocation of Resources

Here's Bill Bonner at http://www.lewrockwell.com/bonner/bonner220.html:

In America today, the Fed's phony new money – created out of thin air – feeds phony house price increases that turns into phony consumer demand that coaxes businessmen in China to make bad capital investments. When the cycle tops, almost everyone everywhere will feel the pain, because the funny money drew out real resources – oil, labor, steel – that might have been put to better use.

Don't get us wrong; we love the Fed as much as everyone else. In the Soviet Union, resources were misallocated by force. In the Fed's empire, they are misallocated by fraud. This is undoubtedly a big improvement; for one thing, it is much more entertaining.


Blogger Columbine said...

Force versus fraud ... a new reality TV show perhaps?

25/4/06 08:48  
Blogger Tad Pole said...

Sounds like a great title for a reality TV show!

27/4/06 16:33  

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