“In the end the Party would announce that two and two made five, and you would have to believe it. It was inevitable that they should make that claim sooner or later: the logic of their position demanded it. Not merely the validity of experience, but the very existence of external reality, was tacitly denied by their philosophy. The heresy of heresies was common sense.”
In Orwell’s dystopian classic 1984 the Inner Party was the privileged ruling class making up just 2% of Oceania. They were the oligarchical political class who enjoyed everything life had to offer, unlike the Outer Party and Proles they controlled. NY Fed Chief John Williams is an example of a modern-day Inner Party member. This week Wall Street’s prime enabler went full on Pinocchio and made an absolutely ludicrous assertion.
According to Williams the Federal Reserve’s $120 billion per month in asset purchases (QE) are lowering housing costs for Americans. This is what Williams said at a virtual speech even hosted by the Bank of Israel.
“The U.S. central bank’s purchases of Treasury and mortgage-backed securities are both contributing to lower housing costs.”
At a time when the Federal Reserve is already suffering from a serious credibility crisis, it’s hard to imagine how someone of privilege would utter such a laughable untruth. It is now common knowledge that the Federal Reserve’s trickle-down liquidity firehose is causing massive asset distortions and rampant price inflation. The Fed’s balance sheet now stands at $8.1 trillion and they are still pouring gasoline on the flames. Homes, cars and just about everything you need to live is getting more expensive. The cost of your sodas at Buc-ee’s just increased over 20%.
If it hasn’t sunk in by now, let me repeat myself. The Federal Reserve is a massive PR machine disguised as central bank. The Fed still sets monetary policy and interest rates as a primary function for regulating the economy, but the Fed’s now billion dollar plus annual budget is also used to perpetuate their own existence and the privileged lifestyles of the Fed governors and Wall Street entities they serve. It’s how they maintain control of the Outer Party members and Proles who do the heavy lifting in the real economy.
If you want to see what a spectacular job Williams and his Federal Open Market Committee comrades are doing to lower house prices in the United States, take a look at Austin, where one index shows prices were up 40% in June! In North Texas average home prices were up 26.1% from June of last year to a record $419,519.
Average home prices in Denton County skyrocketed 30.3% in June. The average price of $482,308 is more than $112,000 higher than the same time last year, but Williams wants you to believe he’s making home prices more affordable for you. Average prices in the City of Denton ballooned 29% in June, but the Fed wants you to know that new record high of $368,256 in Denton is really cheaper when you factor in Fed doublespeak.
It’s amazing the lies central bankers will tell themselves. The lies they tell the American public are financially destructive. Encouraging people to take on more debt at a time of spiraling asset inflation is the epitome of moral hazard, but that’s what the Fed is doing. Continuous credit growth is the name of the game in the realm of central bankers, and the more the better. Every day’s a great day to buy a home…unless you are personally responsible for paying the mortgage.
If Williams really thinks he’s lowering home prices, perhaps someone should send him the bill for one of Denton’s newest residents who just paid 26% over list price on a modest 4-bedroom home in Southridge. Better yet, maybe Williams and the Fed’s FOMC voting members should be personally responsible for every buyer who paid over list price this summer? What would the total dollar figure for that amount to?
I mean if we’re going to engage in thought experiments, why not engage in the possibility of personal accountability for central bankers? We can always dream, right?
With stock market indices hitting new all-time highs this month Jerome Powell is probably worth close to $100 million. The executives at Blackrock have never had it better. Every Federal Reserve board member is a millionaire and all of the Inner Party members are celebrating the COVID recovery.
Remember the message from the Fed. Home prices are really getting cheaper. You just have to close your eyes and imagine it. Inflation is transitory.
Highest and best by noon Friday.