Love of Liberty : federal reserve

Inflation "Targeting"

ChrisR — Tue, 29 Jul 2008 03:24:00 GMT

What if the Fed set a goal for themselves to contain inflation at 3%?

Let's assume (and this is a huge assumption) that government can control its spending to the point where 3% inflation is maintained.

Is this the ticket to success?

Well let's see:

Artificial booms would still exist.
Businessmen would still be mislead into thinking there are more savings then actually exist.
Business calculation would still be distorted.
Since the booms would contain malinvestments, those malinvestments would have to be liquidated....so busts would still exist.
There would still be a transfer of wealth from the poor to the rich.
There would still be an exchange of nothing for something.
Savers would still be penalized...and debtors rewarded.
Speculation (in order to stay ahead of inflation) would still be encouraged.

So is inflation "targeting" the answer?

I say no.

Is it Greenspan's Fault?

ChrisR — Sun, 27 Jul 2008 23:25:00 GMT

Greenspan's book has been released, and it just so happens the recession that he helped create is occuring at the same time. I've been reading a lot of complaints about the many mistakes that Greenspan made as Fed Chairman. But how much blame does he really deserve? Is it all Greenspan's fault?

I would answer the question in the following way:

Instead of blaming one individual, perhaps we should look at the institution itself. If we blame one individual's decisions, then we end up talking in circles about "mismanagement." But a more important question is: "Should the economy be managed at all?" and "Is that even possible?"

History says no...as does the Austrian Business Cycle Theory.

As far as bad decisions that Greenspan made......I think the mistake (of any Fed Chairman) begins at the moment the Fed fixes interest rates, and the market rate is abandoned. That is when the crisis begins. Even though we call the return to reality a "crisis," the real crisis is when the price fixing and malinvestment (i.e., boom) occurs. I think everything else is just talk. If the market set interest rates, it would be impossible to have conversations about "mismanagement," and who has a better "plan."

I think Ron Paul has set an excellent example on how to think about these matters. You never hear Dr. Paul blaming specific individuals at the Fed. In fact, if I recall correctly, he's said several times that we can't place all of the blame at Bernanke's feet. Dr. Paul has pointed out that the mess we are in is an accumulation of trying to centrally plan an economy. I've never heard Dr. Paul blame a specific Fed Chairman by name. Instead he challenges the institution itself.

Murray Sabrin on Ron Paul & The Fed

ChrisR — Thu, 31 Jan 2008 19:08:00 GMT

Murray Sabrin is a very eloquent "Ron Paul Republican" who is running for the U.S. Senate in NJ.

Here is a YouTube of Mr. Sabrin on Ron Paul & The Fed.