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Taking the ‘Blinder’s off Monetary Easing

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03/18/2013

Mark Thornton and Mises in today’s Wall Street Journal in “Letters to Editor” responses to Alan Blinder’s Easing Angst About Fed Easing which originally appeared March 13 in the print edition. A15.

Mark’s commentary (2nd letter in the link above):

Prof. Blinder aptly explores the dangers of the Fed’s easy-money policy but claims it has succeeded in its mandate to keep price inflation low. I object.

Gasoline and food prices have risen. Commodity prices have risen. The Producer Price Index is at an all-time high. Farmland prices have risen to all-time highs. Gold prices are up $1,000 per ounce since the crisis began. Stocks and bonds are at all-time highs. Manhattan real estate and contemporary art prices are at all-time highs. These are all “prices.” Plus, we are exporting inflation around the globe. None of this is good news for Joe Mainstreet and is worrisome for the future.

For more by Mark on inflation see: “Where is the inflation?

From the first letter by Mike Smith of Sugar Land, Texas

Alan Blinder’s op-ed “Easing the Angst About Fed Easing” (March 13) brings to mind Ludwig von Mises’s observation: “Credit expansion (easy money) is governments’ foremost tool in their struggle against the market economy . . . it is the magic wand designed to expropriate the capitalists . . . to lower the rate of interest or to abolish it altogether, to finance lavish government spending . . . and to make everybody prosperous” (“Human Action,” 1966).

Smith concludes:

At some point, we must ask ourselves how many years of 0% rates we must endure before the Federal Open Market Committee stops “plugging away” and allows the unhampered market work its magic.

 

John P. Cochran (1949-2015) was emeritus dean of the Business School and emeritus professor of economics at Metropolitan State University of Denver and coauthor with Fred R. Glahe of The Hayek-Keynes Debate: Lessons for Current Business Cycle Research. He was also a senior fellow of the Mises Institute and served on the editorial board of the Quarterly Journal of Austrian Economics.

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