By now I'm sure many of you have heard that Fed Chair Ben Bernanke has announced a third round of quantitative easing. The Federal Reserve will borrow or print $40 Billion every month to purchase US Treasury or Mortgage Backed Security (MBS) debt. The difference between this round and the previous two, is that this effort is open ended. No time limit, no cap. The Fed 'hopes' that they can stop this activity by mid 2015 and add 'only' another $1.4 TRILLION to our already $16 plus Trillion debt.
It isn’t very well known, but America went through a Depression for 20 months beginning in January 1920. Unemployment went from 1.9% at the end of 1919 to 11.7% in August of 1921. The Dow Jones Industrial Average fell 47% in the same period. Presidential candidate and soon to be President, Warren Harding, offered and executed a financial plan that would have economist of today howling. His plan was the polar opposite of what we have done in any economic challenge since that time. The difference is, his plan worked. What was this plan?
I would like to congratulate Congressman Paul on the passage of HR 459 – The Federal Reserve Transparency Act. This has been a long time coming and I hope the Senate does the right thing and allows this legislation to be voted on soon.