October 4, 2022

Right now, at the beginning of October, with the stock markets down in bear market territory, all voices are wondering if we are heading for a recession.

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But President Biden is jawboning the oil companies not to raise gasoline prices.

“Do not, let me repeat, do not use this as an excuse to raise gasoline prices or gouge the American people,” Biden said at the start of a conference on hunger in America.

Oh please, Mr. President. You think we’re dumb or something, as Lina Lamont once said? Why blame Big Oil? How about: ultra MAGAs?

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Hey Little Joe, at the back of the class. Repeat after me: Almost all recessions, depressions, panics, crashes, you-name-its, are the fault of governments failing to get the economy right after going on an inflation bender — to fight a war or a COVID.

Like, Joe, who was to blame for the Crash of 2008 and the Great Recession, whatever? Oh yeah, I remember now. “Greedy bankers” was the agreed-upon narrative of your devoted regime scribes. Er, no, silly boy. The proximate cause of the Great Recession was Little Ben Bernanke, Chairman of the Fed, who decided in September 2008 that he didn’t have the authority to bail out Lehman Brothers after the jolly old inflationary real-estate boom of the 2000s.

Ben, oh Ben!  Didn’t you know that the one and only justification for the Federal Reserve System — apart from its vitally important role to print all the money that’s fit to print – is to act as the “lender of last resort?”

Lender of last resort? Who he?

See, back at the Dawn of Time, in Britland in 1866, there was a nasty financial crash. And in 1873, a Brit, Walter Bagehot, published Lombard Street: A Description of the Money Market, to explain what went wrong. How thoughtful of him, because he was just in time to teach American bankers how to understand the Crash of 1873. If they had bothered to listen.

Bagehot’s idea was that, to avoid crashes and bank failures, the credit system needs to observe two rules.