I forgot to add: Dan, if you want a good book on the Fed, read William Greider's _Secrets of the Temple: How the Federal Reserve Runs the Country_.
On Wed, Apr 1, 2009 at 8:20 PM, Jim Devine <[email protected]> wrote: > Dan Scanlan wrote: >> ... Today I watched an interesting video at >> http://www.brasschecktv.com/page/585.html that gives a bit of history of the >> banking industry. Once again I'd like to ask a stupid question. I realize >> that many members of this forum have more important things to do on a daily >> basis, but if anyone does take a gander at this film, I'd be interested in >> knowing its flaws. > > I couldn't watch the whole thing (my wife started a phone conference), > but here are my comments on what I saw. There are a lot of valid > things in it, but they are commonsensical. But the stuff about > Rothbard and the von Mises Institute at the start should tip you off: > it's right-wing stuff. It also looks likes a "monetary crank" film: > there are a lot of things wrong with the world (stagnant incomes, > etc.) that can be solved by our monetary solution (the gold standard). > > They seem to imply, for example, that Social Security's imminent > demise would be prevented by their solution. Luckily, SS is far, far > from bankruptcy, so it doesn't need their solution. In fact, I'd guess > that the "Austrian" economists (Rothbard, etc.) would like it if SS > failed, since it goes against "free market" principles. > > They also say that inflation steals from our savings accounts. That's > true -- except when it isn't. Sustained but moderate inflation > eventually leads to higher interest rates which protect our savings. > In the long haul, the "real" (inflation-corrected) interest rate isn't > negative, as long as we avoid hyperinflation. A strong power like the > US is quite unlikely to slip into the latter trap. > > The quote by Rothbard at the beginning about the Fed being not being > responsible or democratically accountable is right on the money (as it > were). However, these folks are not in favor of subordinating the Fed > to democratic control. Instead, they want the gold standard, seemingly > to make the Fed subject to "nature." > > They miss the fact that the Fed is largely subordinate to bankers, > Wall Streeters, and a non-Austrian brand of conservative economics. > This means that the Fed also has inflation-phobia, but not as strong > as the Austries' version. The Fed's decision-makers know that mild > inflation "greases the wheels of commerce" (i.e., is good for > business) and that economic collapses like the one we're in right now > justify taking inflationary risks as a solution. > > The Fed also hates the deflation that the Austries like (as when the > economist says that he wants the value of money to _increase_ over > time, a normal result of the gold standard). Since the Great > Depression, serious economists have known that deflation can be really > bad (making recessions worse). > > Even without a debt-deflation depression like the early 1930s, > deflation is bad for debtors, as the 19th century populists knew. > Maybe we could deal with that by getting rid of credit, but that's > hard to imagine under capitalism. > > -- > Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own > way and let people talk.) -- Karl, paraphrasing Dante. > -- Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own way and let people talk.) -- Karl, paraphrasing Dante. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
