Two
prominent economic experts have warned that "insiders with conflicts of
interest" allied to the Fed's policy of tanking the dollar to bail out
Wall Street could lead to a repeat of the economic crash of 1929,
during a segment on Bill Moyers' PBS show.
"I
think there are three big parallels between what happened in the 20's
and what has been happening in Wall Street lately," Robert Kuttner told
Moyers.
Kuttner is a veteran economic journalist and a former legislative assistant in congress.
"One
is insiders with conflicts of interest that are not fully disclosed to
the public generally, secondly - there's much too much borrowed
money....particularly in the financially engineered parts of the
economy....and third is the lack of transparency - regulators and the
public don't get any kind of disclosure," added the former BusinessWeek
writer.
Kuttner
blamed an economy based on "asset bubbles" for the rising tension in
the markets and said that, similarly to the 1920's, "engineered
euphoria" and companies cooking the books had combined to endanger the
safety of the economy.
A clip of the PBS discussion, for the full video, click here.
Kuttner
called for more transparency and slammed the Fed for recycling a
vicious circle of cheapening the dollar to bail out Wall Street,
inviting another round of speculative excess.
"The
risk is that every time we repeat this cycle, we get bigger and riskier
bubbles. And with the dollar being in the tank-- it's not a costless
kind of bailout," said Kuttner. "One would have thought that if the
dollar were down to 140 Euros there'd be a run on the dollar. We're
gonna see inflationary pressures as a result of the cheap dollar. So
it's not as if the Fed can simply print more money to bail out these
excesses, and there be no cost to everybody else."
William
Donaldson, the former chairman of the Securities and Exchange
Commission, also warned that the dollar was "disappearing" through the
floor as a result of the Fed's policy of bailing out "devious"
investors.
So
I think that the central banks have a greater technique and ability to
meet this problem," said Donaldson. "But insofar as they do-- we run
into a moral hazard, i.e. we bail out the people who made bad or
devious, or whatever you wanna call 'em, investment decisions. So you
sort of are saying, "Go ahead and do whatever you want, and you can
count on the good old Fed to bail you out."
Published on Tuesday, October 16, 2007.
LINK - Paul Joseph Watson
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