What Could the Federal Reserve Learn from the BLM?

Fire Season is here, and merits reflection.  Today's images are of the 1988 Yellowstone Fire, a spectacular consequence of Bureau of Land Management fire management policy.  

For many years, the BLM had a policy of suppressing wildfires.  In the Western USA, wildfire is an essential part of Nature's cycle.  Suppressing smaller fires may have made sense for National Park attendance and other economic interests, but the policy upset Nature's balance by building up a huge unsustainable supply of brush and under-story fuel.   When it finally ignited, the results were super-sized.

For many years, the Federal Reserve has demonstrated a policy of suppressing (the appearance of) economic corrections by continuously expanding debt; facilitating the Federal Government's expansion and expenditure far in excess of its income.  In a functioning market-based economy, cyclical expansion and contraction is normal.  Contractions clear out excess/bad inventory and debt, setting the stage for a new expansion.  The Fed has been busy attempting to suppress corrections, upsetting this natural cycle.  A couple of times (2000, 2008) the correction genie got part way out of the bottle.  Each episode was an excuse to use monetary policy to further accelerate inflation/reflation of debt to suppress future market corrections.

AFTER the 1988 Yellowstone fire, BLM modified its forestry policies to allow for more frequent and more widespread wildfires to keep the fuel supply from growing to epic proportion.   All of us lost a huge part of Yellowstone before common sense guided bureaucratic policy.

The Fed, together with its global central banking associates, has built up the greatest and ugliest debt pile in known history.  Some day, that pile will ignite.  And when it does, the financial markets and the economy are going to burn like Yellowstone in 1988.  I have given up on hoping that central bankers would learn from BLM's experience.  They are determined to repeat it.  Those responsible for the great coming Financial Fire of the 21st Century may be chastised but otherwise will continue to prosper.  The rest of us will get to share the ashes for a long, long time.