Levi, You talk of the Fed as a regulatory body that keep the inflation in check. If there is a decentralized monetary system how do you regulate/influence inflation?
-Daniel On Fri, May 31, 2013 at 10:54 AM, Levi Pearson <[email protected]>wrote: > On Fri, May 31, 2013 at 9:43 AM, Michael Torrie <[email protected]> wrote: > > > I guess time will tell. I don't believe having a prime rate of zero is > > sustainable. Though it's doing a great job of enriching people at the > > expense of those who are frugal savers. > > If by "frugal savers" you mean people who essentially stuff their > money in a mattress, I've already explained why that's not *really* > helping anyone, even in the absence of inflation. Money was invented > to be a liquid asset to facilitate trade, not to "store value". > That's what goods/commodities with real value are for. > > I don't think anyone believes that having the prime rate at zero > long-term is a wonderful thing, but the Fed is limited in what it can > do. It's essentially a system designed to counter extreme fluctuation > in the prices of real goods by dampening swings in the money supply. > Although imperfect, it's a stabilizing force in an inherently unstable > system. You can be sure the prime rate will rise as soon as economic > indicators suggest that aggregate demand is increasing sufficiently to > raise prices across the board sufficiently to take inflation above the > target rate, because that's just what the Fed does. > > Whether you (not you specifically, but speaking in general) appreciate > it or not, pretty much all the economic growth and efficiency gains > that have made us one of the wealthiest nations in the world and have > made it possible for us to all have lots of nice things like cars and > houses are due to the power of credit and its flip-side, debt. These > can't exist in a way that provides the necessary liquidity for > economic growth without entities that are essentially banks. Banks > are a two-edged sword; they're powerful, but easily abused, so it's > critical to closely monitor and regulate their operation to ensure > that they function to the public's benefit. We kind of dropped the > ball on that one, and I'm not really happy about the way that it was > handled, but my ire is not really directed at the Fed. > > --Levi > > /* > PLUG: http://plug.org, #utah on irc.freenode.net > Unsubscribe: http://plug.org/mailman/options/plug > Don't fear the penguin. > */ > /* PLUG: http://plug.org, #utah on irc.freenode.net Unsubscribe: http://plug.org/mailman/options/plug Don't fear the penguin. */
