Set forth below is the text of my response to the comment by Marc posted in yesterday’s blog entry:
Thanks for that super comment, Marc. I am very much a child of the 60s (I’m 54) and I carry around that “Question Authority” attitude with me everywhere I go. It’s been known to get me into a whole big bunch of trouble from time to time!
But the admonition to “Question Authority” is one of the things about the 60s that I believe really turned out to be right (my personal thought is that the “Turn On, Tune In, Drop Out” thing may not have been the greatest bit of personal growth advice that anyone ever came up with) and I strongly agree with you that it very much applies here and that there is a huge contradiction in the reality that lots of other children of the 60s don’t get that. To believe everything that people trying to get you to buy stocks tell you is NOT questioning authority.
Many smart people make the argument that you do about the Fed. I am willing to go along to a point but only to a point. Let’s say that the Fed really did try to inflate the money supply, knowing that that would contribute to the stock bubble. I can go along with all that. There was no law that said that we needed to go along, was there? What if we all sold our stocks when prices got too high? Then prices would have come down and there would have been no bubble, right? It seems to me that this is one re which we are in the ultimate position of control, not the Fed.
I am not saying that the Fed is blameless. I don’t believe that even a tiny bit. But I find it disempowering to blame this all on the Fed. If it is all somebody else’s fault, then we are the poor victims of bad people who live far, far away from us. If we acknowledge that we went along with what the Fed was trying to do, we gain the ability to stop something like this from ever happening again. If we stand up to the Fed, the Fed will stop even trying to pull off such dangerous nonsense.
It is my belief that we need a national debate on what caused the economic crisis and on what needs to be done to get our economy moving again. Certainly criticisms of the Fed should be part of that debate. But criticisms of middle-class stock investors should ALSO be part of it. And we also need to hear arguments pointing out how middle-class investors were pressured to do what they did and arguments pointing out how the Fed was pressured to do what it did. We’re ultimately all in this boat together.
The Fed is comprised of humans just as the community of middle-class investors is comprised of humans. We all are flawed. We all made mistakes. We all need to own up to those mistakes to free ourselves of their terribly destructive power. My take is that, once we do that, the Fed is going to be a far more effective entity than it has ever been in the past and the community of middle-class investors is going to be investing with more confidence and skill and good cheer than it ever has in the past.
My thought is that the key to putting all the bad stuff behind us is us all learning how to say the most difficult words to pronounce in the entire English language — “I” and “Was” and “Wrong.” Those words have a magical power to turn bad into good, in my life experience.
Question Authority! Fight the Man! Power to the People! Never Trust Anyone Over — um — 55!