Pump It Up
Some of the things coming out of the mouths of supposed economic ‘experts’ just boggle the mind. It’s no wonder we’re in the mess we’re in. And with talk like this, we’re going to have a heckuva time getting out of it without things getting worse first.
From Mish’s “Time For Mankiw To Resign”:
April Fool’s day was the only rational explanation I could come up with for a column in the New York Times by Gregory Mankiw, professor of economics at Harvard.
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Imagine that the Fed were to announce that, a year from today, it would pick a digit from zero to 9 out of a hat. All currency with a serial number ending in that digit would no longer be legal tender. Suddenly, the expected return to holding currency would become negative 10 percent.
That move would free the Fed to cut interest rates below zero. People would be delighted to lend money at negative 3 percent, since losing 3 percent is better than losing 10.
Mankiw goes on to say ….
Ben S. Bernanke, the Fed chairman, is the perfect person to make this commitment to higher inflation. Mr. Bernanke has long been an advocate of inflation targeting. In the past, advocates of inflation targeting have stressed the need to keep inflation from getting out of hand. But in the current environment, the goal could be to produce enough inflation to ensure that the real interest rate is sufficiently negative.
I told you they want to see inflation — a “commitment” to higher inflation. And the more the merrier, according to them.
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