I was listening to Jim Cramer on CNBC’s “Mad Money” last night, and for a guy who constantly extols the value of free markets he has sure bought into the Federal Reserve’s radical, market distorting policies.
Maybe it’s because the Fed’s campaign to drive interest rates down is intended to force savers out of safer investments such as CDs and Treasuries, and into the riskier investments such as the stocks Cramer sells on his show.
Indeed, the former hedge fund manager began last night’s show by saying “I’m going to dispel one of the myths that is keeping you out of the market or in CDs, and that’s the myth of the ‘fragile economy.’
“I swear, if I’ve got to read one more article about the ‘fragile recovery’ I will tear out all my remaining hair.”
Cramer argues that economic growth in most of the world “is very real.”
The recovery is just lagging in the United States because President Barack Obama was pursuing the wrong policies — health care reform and reregulating the financial industry — instead of stimulating economic growth as other countries did.
Ok, fair enough.
But then this champion of free markets goes on to support the Federal Reserve’s relentless, radical intervention in the economy?
“I firmly believe the Fed is the adult in the room and it will create jobs with this QE2,” he says.
By “QE2” Cramer means the Fed’s second try at a strategy called “quantitative easing.”
I am certainly more skeptical about its success than Cramer. (Click here to read more about how this strategy is supposed to work: Can’t Anyone Stop The Fed’s Rate Cutting?)
This morning’s New York Times reports that “most economists say it is unlikely to have a big impact on employment and growth.”
Would it be too cynical to suggest that Cramer’s own selfish interests might be behind his willingness to abandon free market principals in this instance — and back the Fed?
It certainly seems that we’ve found a grossly interventist government policy that he can get behind.
It’s the kind of federal intervention in the economy he can apparently get behind.
So what if you can’t earn a fair return on your CDs? Just put your money in the stock market — and watch “Mad Money” for tips on what to buy.