Stupidity At UCLA

Man I tell ya!
You live long enough and you will never be surprised how stupid people really are. Its not that stupidity is not prevalent in our society, we have huge copious amounts of it. But when supposedly smart people start talking like dolts is really when I would have to say enough is enough.

The Chair of The UCLA Economics Department Roger Farmer has this beaut of a piece in the blog section of FT.

http://blogs.ft.com/economistsforum/2010/11/how-to-restore-confidence-in-the-us-economy-without-inflating-a-new-asset-market-bubble/

Few things right off the bat.

1- How in the world can FT publish this drivle?
2- Now I know why California is in such trouble
3- What type of hash is this dude smoking?
4- Mr. Farmer must be long a lot of stocks or himself directly involved in a Ponzy Scheme

He can single handily solve all of our deficit problems if he can just give us the formula for the mind altering drug he was taking when he was penning this article.

Mr. Farmer doesn't want the Fed to indirectly prop up the market, as they are currently doing, but to directly prop up the market.

He wants the Fed to not buy Treasury debt but stocks. In his own words.

"I have argued in this Forum that more QE can create jobs and prevent a second Great Depression. But it matters how the policy is implemented. The Fed should buy stocks not bonds. And rather than commit to a fixed programme of stock purchases, the Fed should use its market power to stabilize swings in the stock market and smooth out bubbles and crashes."

I can't even begin to address the flaws in his logic.

There is more....

"If the Fed were to announce that the Dow would not be allowed to drop below 11,000 over the next three months, for example, it would provide the confidence to private investors to move back into the market and spend some of the $1,000bn in excess reserves that are sitting in the banking system. But guaranteeing no downside to stocks is not, on its own, a good idea. The Fed must also limit swings on the upside. If QE simply fuels another unsustainable asset market bubble it will have made the problem worse, not better. Just as conventional monetary policy stabilizes swings in interest rates, so unconventional monetary policy must stabilize swings in asset prices."
UNREAL! UNBELIEVABLE!

Mr. Farmer wants the stock market to trade with in bands. The Fed should sell stocks if they get to expensive and buy them if they get to cheap.

This guy heads the Econ Dept at UCLA!

The only reason the market exists is for allocation of capital to private hands and price discovery. Why have any Risk Management via Futures and Options?

The Federal Reserve with their meddling have only increased the dislocations and distortions in the capital markets. What you are seeing at the moment in the stock market is that the QE reflation trade is collapsing. When you create distortions from meddling, the only thing you really increase is volatility. When you create dislocations, volatility, uncertainty, and certain collapse in prices are whats in store.

Is there any reason why the Fed wanted higher stock prices leading to GM's IPO tomorrow?

Mr. Farmer's missive is so preposterous that I can't believe FT would publish it.
With Goldman Sachs and the 40 Thieves already owning DC, they would be able to free front run every single trade from no one to the end of man kind. This is socialism for the rich and busted capitalism for the rest of us.

Why in the world do we still believe in Free Markets?
Why do feel free to say the words Free Market anymore?

Mr. Farmer should be carefull - Ben Bernanke I hear reads the FT every morning when he wakes up.