Pushing on a String

Marriner Eccles is a figure too little known to American history. He was a banker in Utah, who became Fed Chief under Roosevelt. In Feb of 1933, Mr. Eccles gave what might be one of the greatest Senate testimonies in history. The St. Louis Fed has it here and it is essential reading. Eccles, before Roosevelt was even sworn in lays out the intellectual, economic, and pragmatic rational for much of what would become the New Deal. No Keynes or economic priesthood, just a Mormon banker with some years of banking experience--the radical pragmatism that has always been this republic at its best. Again, I couldn't more highly recommend reading Eccles testimony.

What little that is remembered about Eccles is his remark of a few years later. In an entrenched deflationary environment, monetary policies eventually become useless, simply flooding more money into the system is the equivalent of "pushing on a sting". The question is if our present Depressionary historian/Fed Chief has ever read anything about his predecessor, or if in his monetary indoctrination, Mr. Bernanke was taught to disregard Mr. Eccles.

Today the FT reports:

The prices of US goods and services, excluding food and fuel, fell last month for the first time since 1982, as aggressive measures to stimulate economic growth failed to inflate the cost of living.

A year ago, someone said to me, "Well, everything Bernanke is doing is inflationary, right?" I replied, "Well, that's certainly what Mr. Bernanke hopes." I think we've learned a lot about hope over the last year.

So, as Cato the Elder took to ending every speech "Carthago delenda est," Jefferson ended his letters, "Divide the counties into wards," we need say, "Debt needs to be written down."