Here's the most amazing video you'll ever see.
It explains why the stimulus didn't "work", other than in its intended purpose of helping Bernanke's buddies.
It explains why prices are rising.
It explains why our national debt is rising.
It reminds me of Clarence Darrow grilling William Jennings Bryan at the Scopes Monkey Trial.
3 comments:
I'm not one to excuse The Bernanke, but he really didn't have enough time to answer Rep Paul's speech masquerading as a question - a criticism I level at most elected people.
Money is anything that's acceptable as a means of payment for goods and services. While I'm 100% certain that Best Buy would accept $1800 in cash for an LED TV, or swipe a credit card (a firm promise to pay the merchant by the issuing bank), I doubt that any Best Buy in the country would accept an ounce of gold for payment. It's an asset, but an illiquid asset. Gold ain't money. You'd take a 20% haircut if you tried to use it as money, and that's a far greater decline in purchasing power than inflation.
It's clear that prices such as energy and food have gone up. But the reason they are removed from core inflation is NOT to hide inflation but rather to smooth out volatility to see the underlying price trends. We calculate measures of unemployment and inflation based on the theoretical efficacy of policy, not to present a comprehensive measure of misery. In other words, we only count the unemployment we can affect, not the unemployment beyond our ability to influence.
I'm no fan of government tinkering or "fine tuning" as they call it. I think they are creating asset price bubbles. But there are other factors raising food and energy prices which we do not control, such as China and India's economic growth - a good thing from a free market standpoint. Energy and food policies have a greater impact on those prices than money supply, bailouts, and budget deficits.
Nick, you clearly don't understand the issue here or what is money.
It is not that gold, silver, palladium, platinum, copper are perfect as money. Commodity money, no doubt, has some issues, but those pale in comparison to the legal counterfeiters that masqerade as central banks supposedly to help us proles.
The core issue is whether 'free people' have a natural right to use what they want as money.
I have this argument with my brainwashed MBA friends. If gold is not money, then why do central banks hold it? They should be holding someone else's paper.
Sth, I am an economist so I'm quite sure I know what money is and what the issues are here.
You can try to use anything you want for money. It's the acceptability and liquidity that's at issue.
Gold is clearly an asset. Whether it is money or not depends on how readily convertible into goods and services it is. Holding gold as an asset is no proof that it's money. I'm wearing gold, and I couldn't trade it for half its value even at a gold dealer's shop much less anywhere else.
There are reasons we don't use commodity money anymore, and it has nothing to do with central banks.it has to do with centuries of economic failures associated with commodity money including clipping, debasement, adulteration, dearth of the metals, and hyperinflation from new discoveries.
It's more correct to say that fiat money isn't perfect, but it's better than all other types of money. We are far from being Weimar Germany here.
Wouldn't you agree a privately held Fed is better than a government run central bank?
Your MBA friends are probably right.
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