Like the arsonist who then heroically fights the fire he set, the Fed is increasing its efforts to bail out banks both at home and abroad. This does not end well.

Original Article: "Is the Fed Trying to Bail Out the World? Sure Looks Like It"
This Audio Mises Wire is generously sponsored by Christopher Condon.

The collapse of Swiss banking giant Credit Suisse recently was a catastrophe long in the making. A quick perusal of the bank’s financial statements from recent years shows that we’re dealing with something analogous to a classic bank run. Credit Suisse’s pool of liquid assets declined more than 50 percent from 2021 to 2022, mostly in October 2022, from CHF 229.9 billion to CHF 118.5 billion as depositors withdrew their money. Despite the timing, however, the fall of Credit Suisse had little directly to do with the collapse of Silicon Valley Bank and a lot to do with the contraction of the international monetary system.
The Contractionary Fed
As pointed out last year, the Federal Reserve has long pursued a deflationary policy. This may come as a surprise, since official inflation numbers

Since the awarding of the Nobel Prize in economics to Ben S. Bernanke, Douglas W. Diamond, and Philip H. Dybvig, most of the media interest has, understandably, concentrated on Bernanke. Mark Thornton wrote a scathing takedown of bailout Ben, while Tyler Cowen inexplicably praised him to the skies (Cowen at least provides a good overview of some of Bernanke’s contributions, such as they are).

We are now well past the corona crisis of 2020, and most of the restrictions around the world have been repealed or loosened. However, the long-term consequences of arbitrary and destructive corona policies are still with us—in fact, we are now in the middle of the inevitable economic crisis.

Throughout the corona “pandemic” the Holy Grail of public health officials has been vaccination: only by vaccinating enough people—first the elderly and infirm, then all adults, and now even children—can the nefarious virus be beaten.

Having marked the quinquagenary of the destruction of the gold standard Sunday, August 15, it is natural to be a little nostalgic for the Bretton Woods system. After all, it might not have been the classical gold standard, but at least it wasn’t as bad as the fiat standard that succeeded it.

The economic analysis of repudiation applies to the debt of all levels of government and to all countries. The central question is not how big the government is or how much it owes, but rather whether the debt is funded by taxes.