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This post is a winner! Love the tips and everything you suggest.. Thanks


I am surprised that no one points out that we can see inflation expectations in real-time using the TED spread. That is the difference between inflation-indexed and non-inflation-indexed Treasury securities. This means the Fed can better react to not inflation, but inflation expectations. If the spread widens, the Fed will know that expectations are increasing and can react accordingly.
The Fed can create that money "by a computer stroke" and remove that money "by a computer stroke."
Is it that you don't believe inflation expectations are properly measured using the TED spread?

Brian Davis

It's a stealth appropriation, another bailout for the banks so they'll be funded to buy back $ Hundreds of Billions in bad mortgage-backed securities they sold to Fannie, Freddie, FHLBs, pension trusts, insurance companies, and private investors. In the process they'll also have to forgive principal on many $ Billions of underwater mortgage loans. Who says Congress controls the national purse? Forget everything you thought you learned watching Schoolhouse Rock.


The Final Word

Today's Financial Times is on my desk and with it Martin Wolf's bold column detailing the currency manipulation of China and why Bernanke is right.

Also on my desk is Buffett's NYTimes tribute to Ben.

When such a hero is acting in the best interests of the United States, to attack him is treason, giving aid and comfort to the enemy, the Chinese.

I am calling Posner out. In his column, Wolf details wherein and why Posner is wrong.

Posner, explain, if you can, how Wolf is wrong when he writes,

"The core of China's condemnation is that the US is exporting its troubles (Posner, as a loyal American, don't you believe in exporting our troubles to China? They certainly export their troubles to us with their cheap imports).

Wolf continues, "It is easy to see three objections to this attack: first, it is untrue; second exchange rate adjustment is necessary; and, third, this is a good description of Chinese exchange rate policy instead."

Posner, I know you won't answer. You coward, you traitor


Check out the video below for a lucid evaluation of QE2.



RHD A thought provoking idea:

"I am surprised that no one points out that we can see inflation expectations in real-time using the TED spread."


You have me reflecting on the inflationary "expectations/reality" of the 70's. In that era we had the real drivers of inflation of a huge baby boom cohort joining the workforce and buying up everything necessary for a new household, plus the pressures that led to going off the gold std, basically a steep devaluation of the dollar and the price shock of oil being repriced accordingly. In those days we often saw figures indicating factories running at 90% plus of capacity and our neighbors fretting more about the burdens of working overtime than unemployment.

Considering the recent era I found this graph interesting:


In the "Clinton era" with the economy hitting on all cylinders, unemployment at such low rates that economists were surprised at no wage inflation, yet there was no inflation. Already indicative of the infinite supply of cheap labor in the world?

The inflation graph from about 1999 on is similar to a graph of the housing bubble and soaring oil prices.

Looking forward, even before the crash, the outlook for housing was not good. The factors of boomers retiring while younger workers had not made enough wage gains to assume the mortgages on the expensive homes predicted stagnation and a flattening if not decline in home prices. Coupled with wage stagnation, unemployment, foreclosures yet to come housing costs (the largest factor of an inflation index) will continue to decline.

So oil? Could go higher I suppose, but we're already responding to eighty buck oil, ha! mileage has returned car ads! and for the fears of China-India bidding up, imagine how onerous $100 oil is to those earning less than $1,000/year. They'll respond sharply too.

So....... if by some magic well beyond the predicted 2% GDP growth in a highly mechanized society flooded with imports, unemployment were to return to the 5% range, I'd expect the machinery would work about like it did during the 90's with low unemployment and no inflation.

Wait! I left out H/C but its "inflation" is not that of too many dollars chasing too few goods, but a pricing system not constrained by either "the market" nor the single payer regulation that has halved H/C costs in most advanced nations.

Sometimes it's interesting to turn the whole equation around; say that you wanted to create "rampant inflation". Ha! how far are we from scarcity of labor that many job holders would have the courage to demand a "cost of living" increase? While it appears there are enough young folk to fill up our excess housing stock what could possibly be done to qualify them for the existing stock of foreclosures and unsold homes? (A miracle?)

With states and localities being required to balance their budgets and with cutting services and laying people off their only option, what would it take to offset that further decline?

In my view putting our people back to work by one means or another trumps concerns over debt or inflation any day. In the same exercise as above, imagine an election two years from now with the same or worse level of desperation, as compared to unemployment being halved even were there some sign of inflation.

Well RHD as we ALL know today, markets are not always right, and inflationary "expectations" of today seem the stuff of handwringing ideologues, it may well be that some retirement funds etc will pay an inflationary hedge premium long before it's due largely because not doing so would be to risk their job if they were caught "off base".


Best bang for the stimulus buck?

Marginal Propensity to Consume, targeting the Multiplier and "benevolent" consumption

As has been discussed, the Multiplier relies on the MPC (Marginal Propensity to Consume). The use of the term MPC here, is a reference to the MPC of a country (or similar economic unit) as a whole, and the theory and the mathematical formulae apply to this use of the term. However, individuals have an MPC, and furthermore MPC is not homogeneous across society. Even if it was, the nature of the consumption is not homogeneous. Some consumption may be seen as more benevolent (to the economy) than others. Therefore spending could be targeted where it would do most benefit, and thus generate the highest (closest to 1) MPC. This has traditionally been regarded as construction or other major projects (which also bring a direct benefit in the form of the finished product).
Clearly, some sectors of society are likely to have a much higher MPC than others. Someone with above average wealth or income or both may have a very low (short term, at least) MPC of nearly zero - saving most of any extra income.
But a pensioner, for example, will have an MPC of 1 or even greater than 1. This is because a pensioner is quite likely to spend every penny of any extra income. Further, if the extra income is seen as regular extra income, and guaranteed into the future, the pensioner may actually spend MORE than the extra £1. This would occur where the extra income stream gives confidence that the individual does not need to put aside as much in the form of savings, or perhaps can even dip into existing savings.
More importantly, this consumption is much more likely to occur in local small business - local shops, pubs and other leisure activities for example. These types of businesses are themselves likely to have a high MPC, and again the nature of their consumption is likely to be in the same, or next tier of businesses, and also of a benevolent nature.
Other individuals with a high, and benevolent, MPC would include almost anyone on a low income - students, parents with young children, and of course, the unemployed.


Video below explains "quantitative easing" pretty well.


Luke H Lee

I believe QE2 is not the solution but only a policy tool to postpone the inevitable deep economic decline. Whatever implementations are adopted, they will just be ineffective in this existing maddening economic condition.

It looks as if we are in a serious dilemma, and we have no solution to avoid the upcoming deeper recession.

I believe we need an Alexandrian Solution this time. Andreas Kluth said that the true “Alexandrian Solution” was, for example, what Albert Einstein was looking for in his search for a Grand Unified Theory — a for…mula that was simple enough (!) to explain all of physics. I believe there is also a solution that is simple enough (!) to effectively solve major problems (e.g.: unemployment and lack of consumption) of the current economic crisis.

Suggest to see:
A New System for the Real Market as a Solution for… http://t.co/MRirNf3

A Reappraisal of Current Forecasts of Upcoming US Federal Deficit and Employment" http://t.co/2bLXYqT


I had posted earlier in this thread in hopes of encouraging certain individuals to refrain from the kind of incivility that has become somewhat typical with the Internet. In response, the commenter "John" doubled-down and rushed to defend his claim that Posner is a "traitor" and goes further by taunting Posner and calling him a "coward."
John suggests that he is merely fighting fire with fire; he claims that "it is routine for right-wingers like Posner to refer to opponents as traitors" and asks, "Why is it wrong for those of us in the center to refer to him as traitor...?" Notice the curiously wide brush employed ("right-wingers like Posner"); I would be surprised if Mr. Posner has ever referred to someone as a traitor for merely disagreeing with him, and if John has any evidence of Mr. Posner doing so then I would like to see it. John claims with little subtlety that he is a centrist, but what credibility does he have when he brands Posner a senile, cowardly, traitor for holding opinions that many centrists share?
John insists that Posner, by opposing QE2, is "publicly taking sides for China and Germany against the United States," and accuses me of doing the same in spite of the fact that I have not yet stated opposition to QE2. Allow me to rectify that.
I believe Mr. Posner's skepticism of QE2 is well-founded and that Federal Reserve Chairman Ben Bernanke has been placed in a difficult position of trying to maintain the Fed's concern for price stability (moderating inflation, a mostly apolitical charter) while placating those in the executive and legislative branch who believe that the Federal Reserve is obligated to provide economic relief (a de facto political endeavor). Bear in mind that the financial crisis occurred in large part because of "easy money" policies (intended to maximize employment and economic growth) that lead to "inflation" in the housing market and a torrent of risky mortgages. To be fair, QE2 is not likely to lead to a housing bubble; in order for that to happen, QE2 would actually have to work.

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Gordon Longhouse

I think that you are being a little hard on the Fed and Ben Bernanke in this post.

While Posner is correct to say that the real answers are to be found in Congress and the Treasury at present there is no will on anyone's part to discuss the problem otherwise than in ideological terms or to make the compromises necessary to start fixing the problem. In the meantime QE might buy some time.

I should not worry over much about the Chinese. They are busy constructing petards upon which they hoist themselves while loudly hollering that everyone else ought to fix the problems they create for themselves. If a big economy maintains a 10 percent plus growth rate year in - year out the price of commodities will explode. The Chinese blame producer cartels.

The Chinese maintain a fixed exchange rate versus the dollar. Consequently they must buy dollars and watch them lose value. They will gnash their teeth but for the time being will have to put up with it as the only alternative is to float the yuan.

As for inflation: US unemployment is how high? How many foreclosed houses are currently on the market and how many more are in the for sale queue once those are gone? Inflation? Don't make me laugh.

The potential loss of status of the US dollar as the reserve currency is a genuine worry as it is only that status(which forces the Chinese and others to buy it) that is keeping the US afloat in this crisis. Luckily the only other candidate for reserve currency status is the Euro and the Europeans are sufficiently feckless that reserve currency buyers aren't rushing to trade their US Dollars for Drachmarks.

Yes QE eases the pressure on politicians to come up with a fix but it is too much to ask of a public servant that he deliberately bring on a crisis in the hope that this will bring on a solution even at horrendous cost. If politicians are sitting back and letting the Fed try to do the job, the blame rests with the politicians, those who elect them and those who are supposed to be keeping the electorate informed and not with the Fed.

The US is currently borrowing money to pay interest on past debts. Soon it will have to borrow money to pay the interest on the money borrowed to pay the interest et cetera et cetera, ad infinitem until bankruptcy.

The problems will not be fixed without a substantial amount of pain that will have to be spread as evenly as circumstances permit. Who is to blame is only interesting to the extent that it points to future reform. Until the politicians come to this point and start talking to one another like adults, everyone else including the Fed will have to try to keep things together as best as they can.


Mitchell: Perhaps it is "over the top" for John to come to the "traitor" conclusion. Instead it's perhaps easier to make the case that they're both so overly infused with "Chicago School" over confidence that "the market" fixes all that played a major role in creating this mess. Gspn recently apologized for his own faith. Those negligent in oversight have yet to rise to the occasion.

Like right wing pols, neither of our profs trust Keynesian cyclical spurring, seem to offer only (phamtom?) budget cutting and tax reduction as the only tools for fixing the mess, despite most economists finding tax cuts for the upper incomes being among the least effective per dollar in spurring. As were (wrongheaded?) advisors of the 30's they're far more concerned about the "risk" of inflation and value of the buck than about jobs for the masses. "Let 'em eat cake?"

Some of my work and acquaintances, puts me close to the new home biz, and I'd agree with you, that be it housing or biz, small changes in the interest rates are not likely to do much. On the other hand (ha! economists have to have two!) at street level banks still are not lending. Is this because small biz balance sheets and income projections look too miserable? or there is fear of more asset deflation? Probably some of each.

"Easy money inherently dangerous?" I don't think so, in the 50's we had 5 - 6% mortgages but the differences were having banking standards... and dare I mention thousands of small banks limited to doing biz in their own state? None "too big to fail" or to take the entire world down.

But let's consider, in this era of transition the combo of "cheap money" and idled labor. A wind farm, solar array, or the $40 billion 52" pipeline from my state of AK that will bring cheap domestically produced NG to our midwest might not be "economic" at 7% but may well pencil at 5% or less. Given a world that is actually awash in capital it can't be a bad thing to make these long term investments even though some may not work out.

Could this cheap money light off housing inflation. No! while prices will rebound in highly desirable areas, new home starts are off from 2.5 mill at the peak to under 400,000 today and we've a huge overhang of unsold, foreclosed and yet to be foreclosed homes. Half built-out subdivisions are begging to be bought for dimes on the dollar and are not selling. "Easy money" will allow others, at some point, to buy the subdivisions and build homes at relatively lower price points than today.

While domestically "QEII" may not amount to much, I'm with John in thinking (immediately) that it's a shot across the bow of some nations and backs up the President's message that we simply can NOT be the export dumping ground for the rest of the world.

Domestically, I'd guess the Fed is pretty well out of ammo and the rest is up to Congress and the Admin. Since the Reagan era I've not been a fan of "partying on the credit card" but in this mess I'd suggest another trillion in stimulus spent on energy policy transition and infrastructure maintenance and upgrades would be money well spent that will pay dividends in the future...... and, importantly, decrease the pain and desperation of the next half dozen or more years.

We're already stuck passing on the ranch with a rather largish mortgage, so we may as well spend a bit more to pass on a ranch that is fixed up and prepared for future decades.

Christopher Graves

Isn't this the kind of thing that created the boom and subsequent bust in the first place?

By the way, Germany and England are wising up. Following their lead in repudiating Keynesianism or monetarist versions of Keynesianism is hardly treason. Rather, it is simply demonstrating good sense.


Chris: Do you think low interest rates necessarily leads to blantantly fraudulent banking practices?

Is it "old fashioned" to have regulatory oversight? An anti-trust division that prevents too much consolidation?

What are your thoughts on the repeal of Glass-Steagal allowing "banking" and "insurance" to combine?


An opinion from another Nobel prize winner:

Axis of Depression

by Paul Krugman

What do the government of China, the government of Germany and the Republican Party have in common? They’re all trying to bully the Federal Reserve into calling off its efforts to create jobs. And the motives of all three are highly suspect.

It’s not as if the Fed is doing anything radical. It’s true that the Fed normally conducts monetary policy by buying short-term U.S. government debt, whereas now, under the unhelpful name of “quantitative easing,” it’s buying longer-term debt. (Buying more short-term debt is pointless because the interest rate on that debt is near zero.) But Ben Bernanke, the Fed chairman, had it right when he protested that this is “just monetary policy.” The Fed is trying to reduce interest rates, as it always does when unemployment is high and inflation is low.

And inflation is indeed low. Core inflation — a measure that excludes volatile food and energy prices, and is widely considered a better gauge of underlying trends than the headline number — is running at just 0.6 percent, the lowest level ever recorded. Meanwhile, unemployment is almost 10 percent, and long-term unemployment is worse than it has been since the Great Depression.

So the case for Fed action is overwhelming. In fact, the main concern reasonable people have about the Fed’s plans — a concern that I share — is that they are likely to prove too weak, too ineffective.

But there are reasonable people — and then there’s the China-Germany-G.O.P. axis of depression.

It’s no mystery why China and Germany are on the warpath against the Fed. Both nations are accustomed to running huge trade surpluses. But for some countries to run trade surpluses, others must run trade deficits — and, for years, that has meant us. The Fed’s expansionary policies, however, have the side effect of somewhat weakening the dollar, making U.S. goods more competitive, and paving the way for a smaller U.S. deficit. And the Chinese and Germans don’t want to see that happen.

For the Chinese government, by the way, attacking the Fed has the additional benefit of shifting attention away from its own currency manipulation, which keeps China’s currency artificially weak — precisely the sin China falsely accuses America of committing.

But why are Republicans joining in this attack?

Mr. Bernanke and his colleagues seem stunned to find themselves in the cross hairs. They thought they were acting in the spirit of none other than Milton Friedman, who blamed the Fed for not acting more forcefully during the Great Depression — and who, in 1998, called on the Bank of Japan to “buy government bonds on the open market,” exactly what the Fed is now doing.

Republicans, however, will have none of it, raising objections that range from the odd to the incoherent.

The odd: on Monday, a somewhat strange group of Republican figures — who knew that William Kristol was an expert on monetary policy? — released an open letter to the Fed warning that its policies “risk currency debasement and inflation.” These concerns were echoed in a letter the top four Republicans in Congress sent Mr. Bernanke on Wednesday. Neither letter explained why we should fear inflation when the reality is that inflation keeps hitting record lows.

And about dollar debasement: leaving aside the fact that a weaker dollar actually helps U.S. manufacturing, where were these people during the previous administration? The dollar slid steadily through most of the Bush years, a decline that dwarfs the recent downtick. Why weren’t there similar letters demanding that Alan Greenspan, the Fed chairman at the time, tighten policy?

Meanwhile, the incoherent: Two Republicans, Mike Pence in the House and Bob Corker in the Senate, have called on the Fed to abandon all efforts to achieve full employment and focus solely on price stability. Why? Because unemployment remains so high. No, I don’t understand the logic either.

So what’s really motivating the G.O.P. attack on the Fed? Mr. Bernanke and his colleagues were clearly caught by surprise, but the budget expert Stan Collender predicted it all. Back in August, he warned Mr. Bernanke that “with Republican policy makers seeing economic hardship as the path to election glory,” they would be “opposed to any actions taken by the Federal Reserve that would make the economy better.” In short, their real fear is not that Fed actions will be harmful, it is that they might succeed.

Hence the axis of depression. No doubt some of Mr. Bernanke’s critics are motivated by sincere intellectual conviction, but the core reason for the attack on the Fed is self-interest, pure and simple. China and Germany want America to stay uncompetitive; Republicans want the economy to stay weak as long as there’s a Democrat in the White House.

And if Mr. Bernanke gives in to their bullying, they may all get their wish.


"Jack" and "John" obviously are the same dimwitted blog troll. He/she/it probably could not make it through the first chapter of The Problems of Jurisprudence.



Good description of Sarah Palin:

"obviously . . . . same dimwitted blog troll. . . she probably could not make it through the first chapter of The Problems of Jurisprudence.

or even the Sunday comics

:<) John


Jake: If you can work up a cogent critique, please do so, but make it something of a best effort, OK? Few of us need a reprise of the "cut taxes" for those who gleaned the most during the regulatory hiatus".

As for "we're gonna cut spending this time, .. no really!" umm can I point out the timing being more than a tad off?

Christopher Graves

Jack, I have frequently voiced support in previous posts for reinstating something like the Glass-Steagall Act as long as we bail out banks and depositors.

Second, I have no problem at all with low interest rates if the interest rate is determined by the market, which would indicate that there are sufficient loanable funds available from total savings in the economy to sustain investments. I do have a problem with increasing the money supply to artificially lower the interest rate, which will probably lead to a bust later on since there are likely to be insufficient savings to fund investments entered into by entrepreneurs enticed by the lower interest rate.

Interest rates are prices; prices for loanable funds. It is always dangerous for the state or its agencies to interfere with the price system since it misleads market players. And speaking of prices, inflating the money supply will likely create distortions in relative prices which, in turn, leads to bubbles. The inflationary process is especially insidious when the general price level does not rise or rises only slightly. It is a mistake to think that inflation only shows up in rises in the general price level. Of course, when the general price level rises, then that creates all of the well-known problems that plague an inflationary economy even if it can spur economic growth in the short-run. Inflationary booms cannot be sustained.


Christopher Graves

Bubbles are not economic events---they are psychological events.As recent events have shown, predicting, understanding, controlling bubbles is beyond the ken of economics. The people who saw the future (Buffett and Munger and others) all reject the central tenants of economics and instead are students for life of applied psychology.

You will never understand if you believe that gold is an investment

There is no rule of economics that dictates that the amount of money available to be lent is equal to the number of good loans. To the contrary, in a world of perfect competition, it is impossible to make a good loan. As competition increases, loans and defaults accelerate. Hence, Buffett, Munger, and Gates invest only in a business with "moats."

From this it follows that there is no such thing as individual security or stability. There is no magic bullet in small, limited government. I could go on and on about all the accepted truths of the right wing that are false but the concepts are beyond the grasp of but one or two readers of this blog.

Chuck Prince said it all. When you are a banker you have no choice but to dance until the Band stops. Instead of paying attention to Posner, people ought to be paying attention to Patton, Bhide (Hustle), and John Boyd (? and ?) Boyd has a lot more to tell us how to deal with the issues raised by Chuck Prince than the two writers of this blog.

The World is not are you see it whatsoever. Today's papers report that NATO has finally asked Russia in under the tent. Ireland is being forced to accept a bail out. QE is justified, if for no other reason, because it makes solving the Euro problems easier, surely 50 basis points and possibly more for Ireland in the short run.

Posner is nothing but an Republican apologist. How long has he been a judge. Find a person whose life he has made better?

As for his being a traitor, Steve Forbes was on Fox this morning talking about Obama's "Soviet style" management, and that was the nicest thing he said.

Posner has ventured out into the public square by his comments here and he best be up to taking it and well as giving it out. Have you noticed, he has never said bo-peep by way of criticism of any Republican since this blog started. For example, do you see him defending the TARP or the stimulus?


Chris, Thanks, and I guess it would be a lot easier to discuss perfect markets were we not trying to come out of a tailspin caused by unregulated "markets" and wholesale fraud with the perps not only still on the loose but living happily ever after in fancy compounds from Long Island to Florida while awaiting their next "performance" bonus, or lacking that a golden parachute of family fortune proportions (as if having accomplished something of worth) they, and I'm sure our profs, would rather pass on sans taxation that their spawn can opt for lives of indolence and privilege along with yet the next generation and those to follow.

But I assume you and others to my right are nearly as disgusted with the mess and its causes as myself...... it being not possible to be MORE disgusted than me.

But to your basic theory of opposing "artificial interest rates" and perhaps the current fad of trying to operate a modern economy sans a central bank? Every powerful machine I can think of from diesel or jet engines to capitalism requires a governor of some sort. If you keep feeding fuel to a diesel, for example, it will keep drawing in air and give you all the power you want until it over-revs and throws pistons everywhere and melts.

Consider: Assuming a banking system of integrity and traditional lending standards, the fed could have curbed the housing bubble by tightening until the 10 year bond price pushed up mortgage rates, thus making "housing investments" less attractive and bonds more attractive. Apparently, among the reasons Gspn did not tighten is exactly the over-reliance on the "inherent wisdom of "the market"" the right has come to worship as the false god it is.

In essence AIG, Goldman and others who "didn't understand" the derivatives their bright boys designed WERE our Fed.

But let's turn it around for a moment: Suppose high immigration, a baby boom, a natural disaster or all three combined to create a tremendous demand for housing. As 70% of housing is sold on long term mortgages with little down, the demand for capital (yet to be amassed) is very high. If the short supply of capital resulted in high rates and large down payments being demanded, if the needed capital was available at all, is that a reason to stifle housing? or saddle consumers with crippling mortgage rates?

I think not. But then I see our system as being a healthy tension between a functioning democracy harnessing the power of capitalism rather than our being expendable pawns of a devil-take-the-hindmost capitalist machine which has already run amok in having allowed all of the per capita gains of increased productivity to accrue to the top few percentiles of earners......... gleaners? Very much like what happened in the late 1920's.

Nope. As powerful a machine as honest capitalism can be it will not run on its own for the benefit and welfare of our citizenry.

Christopher Graves

John, bubbles are created by the false signals sent by the Fed interfering with the price system as they tinker with the money supply. Yes, there is a psychological aspect to it as well as a rational calculation by market players even when they catch on to what is happening as they attempt to ride the crest of the wave, to mix economic metaphors, and then sell at its peak.

Christopher Graves

Jack, while I would agree that regulation is necessary in markets, and especially financial markets, I see the basic cause of the boom and bust cycle that we are in the process of recovering from as the culmination of an on-going process of the Federal Reserve attempting to blunt the effects of past boom and bust cycles by introducing increasing amounts of credit into the financial system thereby artificially lowering the interest rate. This process induced entrepreneurs to invest at rates that the system could not sustain over time due to lack of total savings.

The injections of credit into the financial system also caused distortions or relative prices that gave rise to bubbles in various sectors of the economy over the time that Greenspan headed the Fed. Coupled with these price distortions were policies of the Federal government and its associated agencies that encouraged home loans to people who could not reasonably be expected to make payments over time on their newly acquired homes. As you know, many of these loans were sold to unwary buyers of the debt as they were, at times, fraudulently bundled with sounder investments. When this bubble in home prices popped after being pumped up by the policies of the Fed and the Federal government, we then entered the correction phase of the business cycle. That should have liquidated unsustainable investments. But bailouts and re-inflating the economy are acting to short-circuit that process by continuing the misdirected investments. This stabilization strategy simply postpones the day of reckoning and further diverts investment funds away from sustainable investments that could aid in developing a sustainable recovery.

I am not necessarily opposed to a central bank. I am opposed to continual injections of credit into the system that cannot be sustained over time. I am arguing for allowing the interest rate to be determined by the market for loanable funds and growth in the money supply being more predictably set by a rule or procedure such as a monetary rule or a return to the Gold Standard in some form.


Most sensible voters, at least those disinclined to being subjects under a totalitarian regime, would much sooner vote for Sarah Palin than a wannabe intellectual like John above. Dude seems to get his ideas from reading the side panels of breakfast cereal boxes.

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