Wednesday, October 26, 2005

Bernanke Bad!

I know that it happened on Monday, but I thought that I would take a little time to learn about the new Federal Reserve Chairman Bernanke. After searching around a little bit I find that I am AGAIN not happy with a Bush pick. Let me try to explain. Here is one of his more famous quotes:
"The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation."

This is textbook Keynesian drivel. John Maynard Keynes was a hack whose greatest contribution to economics is the love of the classic supply and demand curve (which is only an X that explains nothing). I could seriously rant in economistese, but it would be confusing for all (including me). Anyone care to take a stab at why the above quote is nonsense?