“It is hard to imagine a more stupid or more dangerous way of making decisions than by putting those decisions in the hands of people who pay no price for being wrong.”
Thomas Sowell
On Monday, the Noble Prize in Economics was awarded to three economists. Among them was former US Federal Reserve Chairman, Ben Bernanke.
It is an understatement to say that Ben Bernanke did not see the 2008 Global Financial Crisis (GFC) coming. Look at some of his comments before and even during the GFC.
Bernanke became famous in 2008 when he fired up the Fed’s money printer to bail out the banks. He created the precedent that led to 14 years of uncontrolled money printing for which the world is now paying the price. Watch below how he described the process. When you are in control of the money printer, you can just create any amount of money and credit any account you want. In 2008 and 2009 he bailed out the banks when millions were losing their homes in the US.
Once he started Quantitative Easing (QE), which is code for money printing, he could not stop. He ended up printing trillions of dollars to prop up banks and the bond market until the end of his term in 2014. In hindsight, he was a small player compared to what Jay Powell, the current Chairman of the Fed, ended up printing during Covid.
After crashing the British Pound and triggering a crash in the British Government bond market, the UK Prime Minister fired her finance minister. See previous newsletter here if you want a refresher on the reckless policies that led to this financial debacle.
Of course, Kwasi Kwarteng is the scapegoat. He only implemented the measures that won Liz Truss her position as Prime Minister a few weeks ago. He ended up keeping his position for only 38 days.
Unfortunately, the damage has been done. Investors now question the credibility of the UK government to keep its finances under control. Long-term UK government bonds are down more than 50 percent this year. This type of bond is primarily held by UK pension funds.
In the UK, odds are increasing that Liz Truss will be gone within weeks. The Daily Star even started a contest online: Would Liz Truss outlast a lettuce? You can watch a livestream of the lettuce below. So far, the lettuce is holding strong.
In the US, the CEO of JP Morgan, Jamie Dimon, criticized the way countries have been managing their energy transition. He is not holding back, see this short clip below.
Regarding the war in Ukraine and its consequences, I highly recommend you watch the interview of Jeffrey Sachs below. Sachs is an American economist, academic, public policy analyst, and former director of The Earth Institute at Columbia University, where he holds the title of University Professor. He is known for his work on sustainable development, economic development, and the fight against poverty. In this interview, you will hear things you don’t hear in mainstream media. This is a must watch at a time when governments are increasingly talking about nuclear war.
Best Podcast Episodes of the Week
I listen to many podcasts every week. You will find below the links to a selection of the episodes I found most interesting this week.