Fedthink!

Today I coined a new word, Fedthink. I hope it catches on. Here are some reader thoughts and my comments on them from a recent post.

Regarding Fedthink

Reader: Sometimes I wonder if people like Mish really think that the Fed plays it straight in times like this, versus telling us what is ostensibly the straight dope while they are actually playing some complex metagame.

Mish: I have commented on this before. The Fed believes the nonsense they preach on 2% inflation, inflation expectations, the Phillips curve and other economic nonsense that amusingly even the Fed's own studies prove wrong.

There is no diversity in thought at the Fed. You get in the position of Fed Governor or President by thinking the same way as the rest of the members.

People confuse diversity with race and sex. True diversity is in thought. But there is no diversity of thought at the Fed. They have all been trained to be ignorant. And you do not get into the group unless you believe the same things.

This we call Fedthink.

Regarding Debasement

Mish: [Regarding why gold was $43 per ounce when Nixon killed gold convertibility, and is over $2,800 now.] "What's changed is persistent Fed and government-sponsored inflation."

Reader's Accurate Assessment: Or to put it another way, it's currency debasement. The dollar is not sound, it is a sliver of a fraction of itself from early last century, but has held its position relative to other currencies.