Anna Schwartz in WSJ: Bernanke Fighting Last War

She does not seem to suspect any foul play, or be willing to say.

This is my favorite passage:

"Everything works much better when wrong decisions are punished and good decisions make you rich." The trouble is, "that's not the way the world has been going in recent years."

Ron Paul's Convention Speech

Joe Six-Pack supports Ron Paul, and realizes the problem in the financial system (caused by derivatives especially). Do not under-estimate Joe Six-Pack.

www.JoeSixPack.me

Take a look at my videos from the campaign trail at:

http://www.youtube.com/user/johnu78

Enjoy,
John
http://www.voteubele.com
john@voteubele.com

Marilyn in Lake Jackson

Off Subject, but don't forget, we can still order Ron Paul Cola!! This campaign will continue long after this year's election:

campaigncola.com

It has become a rigged game. Trying to manipulate the principals of Free Market economics can only lead to disaster in the long run; elementary.

Thanks for posting this. It was very easy to follow and shows that economics can be boiled down to common sense.

Either way this is going to get fugly.

"Lead, follow, or get out of the way."
-- Thomas Paine

MAYBE just MAYBE ,the EXPERTS will get to the problem of this crisis ...There is NO credit freeze....There is only; NO demand for credit as people have a responsible attitude or we are satisfied...The DEMAND is NOT there ..Either because of lost wages or too heavily taxed ....There is NO DEMAND for DEBT or CREDIT ...THEY just stole what was left of any money flow from this end ....NOW they want us to borrow???LIQUIDITY is NOT the problem CAPITOL is the problem & that is the problem NATIONAL DEBT has created.....Maybe if the experts identified the problem correctly we could get out of this mess......BECOME responsible CONGRESS,YOU DEN OF VIPERS...NOW you expect to throw healthcare at us ,on top.....BUST for sure,SOCIALISTS traitors..
ANY ONE placeing the U.S. CONSTITUTION into such jeopardy is a TRAITOR ..SIMPLE ..first commandment rule..
weee

Does Ms. Schwartz state anywhere that the Fed is the problem--not by their stupid decisions and actions, but that having a Fed at all is the problem?

Take a look at this:

http://www.youtube.com/watch?v=LW0PNaltukc

It's awesome!

-John
http://www.voteubele.com
john@voteubele.com

There's no doubt in my mind that these central bankers are in over their heads... They've been riding the gravy train since 1913 and I'm sure it got to the point that they think they have absolute god-like power.

I have a strong feeling that they're not sleeping at night, because they know that their power is about to end. They'll try to institute a new global monetary system and mark my words, it will fail. They won't get far with it.

The era of FIAT currency is over and the era of central banks is over. People won't have any confidence in any system they introduce let alone a single one-world currency...

Our time has come. We will have our revolution... A peaceful revolution.

I hope that some Daily Paul members read this and decide to run for office... Any office. Like Ron Paul said "we have a moral obligation to do something with the knowledge we have"... We have the truth. We have the answers.

We could definitely win this thing by just getting politically involved and spreading the message to as many people as we can.

---------------------------------------
Do you know someone who cares a lot about Israel? Send them this link that explains why Ron Paul's message is better for Israel, America, and the world. www.AmericansForIsrael.com

Marilyn in Lake Jackson

This 92-year-old lady is sharp as a tack! I wonder what she thinks of Dr. Paul? Very interesting article.

~Mikael / Peace, love, Light and unity ~

How eloquent and concise a communicator Ms. Schwartz is! She lays it out so simply and forthrightly... it's a shame nobody asked for her expertise somewhere along the way, considering how senior and knowledgeable she is. Her perspective would have been invaluable, I think.

It's always amazing to me that generals have historically often tended to fight the "last" war. I never thought economists did, too, but it makes sense. Bureaucracy never promotes thinking outside the box, and when under pressure, we revert to what we know. Bernanke knows (or thinks he knows) the depression of 1929, so that's the fight he's fighting.

Too damn bad his fight will have the exact same outcome and the People get to pay the price...again.

Thank you too Michael

It takes real guts to let a large, powerful institution go down. But the alternative -- the current credit freeze -- is worse, Ms. Schwartz argues.

Mike
"Fire Team for Freedom" and "Revolutionary Business"
visit www.mikeandjake.com

Ms. Schwartz won't say so, but this is the dirty little secret that led Secretary Paulson to shift from buying bank assets to recapitalizing them directly, as the Treasury did this week. But in doing so, he's shifted from trying to save the banking system to trying to save banks. These are not, Ms. Schwartz argues, the same thing. In fact, by keeping otherwise insolvent banks afloat, the Federal Reserve and the Treasury have actually prolonged the crisis. "They should not be recapitalizing firms that should be shut down."

Rather, "firms that made wrong decisions should fail," she says bluntly. "You shouldn't rescue them. And once that's established as a principle, I think the market recognizes that it makes sense. Everything works much better when wrong decisions are punished and good decisions make you rich." The trouble is, "that's not the way the world has been going in recent years."

Instead, we've been hearing for most of the past year about "systemic risk" -- the notion that allowing one firm to fail will cause a cascade that will take down otherwise healthy companies in its wake.

Mike
"Fire Team for Freedom" and "Revolutionary Business"
visit www.mikeandjake.com