When Interest Rates Rise by Martin Feldstein - Project Syndicate

When Interest Rates Rise by Martin Feldstein - Project Syndicate

Martin Feldstein is an economist. He is also connected to the most diabolical clubs in the world. You can see this from his biography, which was posted at NBER.ORG without a copyright. So it is posted in its entirety here:


Martin Feldstein is the George F. Baker Professor of Economics at Harvard University and President Emeritus of the National Bureau of Economic Research. He served as President and CEO of the NBER from 1977-82 and 1984-2008. He continues as a Research Associate of the NBER. The NBER is a private, nonprofit research organization that has specialized for more than 80 years in producing nonpartisan studies of the American economy.
From 1982 through 1984, Martin Feldstein was Chairman of the Council of Economic Advisers and President Reagan's chief economic adviser. He served as President of the American Economic Association in 2004. In 2006, President Bush appointed him to be a member of the President's Foreign Intelligence Advisory Board. In 2009, President Obama appointed him to be a member of the President's Economic Recovery Advisory Board.
Dr. Feldstein is a member of the American Philosophical Society, a Corresponding Fellow of the British Academy, a Fellow of the Econometric Society and a Fellow of the National Association of Business Economics. He is a Trustee of the Council on Foreign Relations and a member of the Trilateral Commission, the Group of 30, the American Academy of Arts and Sciences, and the Council of Academic Advisors of the American Enterprise Institute.
Dr. Feldstein has received honorary doctorates from several universities and is an Honorary Fellow of Nuffield College, Oxford. In 1977, he received the John Bates Clark Medal of the American Economic Association, a prize awarded every two years to the economist under the age of 40 who is judged to have made the greatest contribution to economic science. He is the author of more than 300 research articles in economics. Dr. Feldstein has been a director of several public corporations. He is also an economic adviser to several businesses and government organizations in the United States and abroad. He is a regular contributor to the Wall Street Journal and other publications. Martin Feldstein is a graduate of Harvard College and Oxford University. He was born in New York City in 1939. His wife, Kathleen, is also an economist. The Feldsteins have two married daughters.

So, here is a guy connected by the highest network, to the major financiers of the world, warning about higher interest rates coming. But as we have seen that is what bankers and their friends do. I listened to an interview with Brady Dougan of Credit Suisse and he said the same thing, get protection from the coming higher interest rates.

But why would banks sell protection for something that could destroy them if their prediction came true? It is quite simple really. They are lying about the coming higher interest rates. They know that they are in control of the interest rates, and demand for collateral for these swaps gives them a nearly foolproof business which suppresses those very rates they fear monger about. 

Surely Feldstein knows that interest rates can be controlled by demand for treasuries. And the demand can only grow as clearinghouses are popping up that will clear swaps trades and demand trillions more in pristine treasury bond collateral. That is the real gold, these days. And surely Feldstein knows this.

So the scam goes on, preach fear of higher interest rates and sell protection for the higher rates that never come. It is a scam that drains main street, and is built upon a lie.

It could be argued that this is a necessary lie. Now that the interest rate swaps exist en masse, the banks are forced to keep interest rates low or face a massive world financial meltdown. So the lie is now necessary unless somehow we could roll back the clock and do away with interest rate swaps.

These swaps are indeed weapons of mass destruction. But Buffet is no doubt taking the view that weapons of mass destruction makes mass war obsolete. That way, the swaps take risk out of banking, make lending to main street of little importance, or if the loans are made, forcing the borrowers to take a swap and the high interest fixed side of the trade.

Folks, this is a huge business. This is a massive fraud and lie that makes banking safer but main street suffer. Borrowers suffer. Big companies who do not want to be trapped in this keep huge cash reserves so they are unable to pay a fair wage. The growth of the developed nations slows to a crawl.

In the quest of making banking virutally risk free, the risk is then put upon the society to survive. And the rich get richer while everyone else stays the same or is in decline. Over many years this could destabilize society and lead to a destruction of these very banks. But for now, the weapons of mass destruction have given us a stability, at a very steep price for the real world and main street.

Surely Martin Feldstein knows all this. So one has to wonder if his articles warning about interest rate increases are just a blatant lying. Perhaps he will tell us the whole truth about his positions one day.

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