Price Stability and Top Secret Missions
Secrecy, price controls and stability... are things out of control?
In what I believe will be the financial post of the week anywhere, Prof. Depew Hit one out of the park in today's Five Things. Here is a section of Point #1, "Federal Reserve's Joy Division", in case you missed it.
- Before today the overwhelming majority of those who either observe or participate in financial markets presumed the Federal Reserve retained some sort of control over price stability, financial markets and, to a degree, even certain asset prices...
(Please see the rest of #1 from today's Five Things)
But the "joy division" does not stop there. Sometimes things get so out of control that Central Bankers resort to tactics that have failed every time in history, like price controls. The Financial Times has this report: Beijing imposes price freeze.
China is to enforce a freeze on all government-controlled prices in a sign of Beijing's alarm about rising popular anger over inflation, now at its highest rate in more than a decade. The order freezes a vast array of prices still under the control of government in China, ranging from oil, electricity and water to the cost of parking and park entrance fees.
"Any unauthorised price rises are strictly forbidden . . . and in principle there will be no new price-raising measures this year," the ministries said.
Prof. Depew also discussed China's implementation of price controls in point #5 today. I would like to add these comments:
- Price controls are absolutely 100% guaranteed to fail. They have failed to work 100% of the times they have been tried.
- The Chinese economy could easily crash over this.
- Hasn't anyone learned anything from Nixon, or for that matter Zimbabwe?
U.K. Top Secret Missions
But the insanity does not stop there. Occasionally, like now, Central Bankers need Covert Actions to "ensure price stability". Finfacts Ireland is reporting Bank of England needs covert actions to prevent panic.
Bank of England Governor Mervyn King said today that British and European Union laws complicated plans to rescue Northern Rock Plc and prevented the Bank from acting covertly to prevent a panic. "The interaction between different pieces of unconnected legislation made it almost impossible for us to act as a lender of last resort in the way that I would prefer."
What way does Mervyn King prefer? Covertly, of course. The Bank Of England does not want anyone to know what it's doing. (For that matter, neither does the Fed). This is interesting because just a week ago Governor King said it was a moral Hazard to bail out Northern Rock. I guess there is no moral hazard as long as it can be done on a top secret mission and no one knows.
U.S. Top Secret Missions
Back in the U.S. Bush needs top secret wiretapping, secret prisons outside of the U.S., etc, etc. Bush even went so far as demand records from search engine providers like Google. What for? Who knows? What we do know is that it is an intrusion into private lives of citizens by the unbelievably paranoid. Fortunately, (for now anyway), Secret Requests For Search Records Through Patriot Act Ruled Unconstitutional.
A US district court judge has ruled that it is unconstitutional for the US government to send secret letters demanding search records from search engines. A provision of the Patriot Act has allowed for such letters to be sent to search engines, ISPs and others by the Federal Bureau Of Investigation -- and made it illegal for companies getting such FBI demands to even reveal the requests at all in general. Today's ruling found that violated free speech rights.
Totally Out Of Control
As you can see, things are totally out of control in the U.S., the U.K., China and scores of other places including the EU. We are not just talking about "price stability" either but rather stability in general. More secrecy will be requested to keep things stable.
There is only one way to stop these government intrusions that I can think of. Vote for Ron Paul. He is the only candidate who wants to get rid of IRS and the Fed. He is also the only candidate who voted against the war in Iraq and he is the only candidate that stands a chance of making the role of government smaller. The latter point is crucial. I added a small Ron Paul banner to my Global Economics Blog today.
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