Over the last week, I have been somewhat pleased at the grilling of Bernanke by certain members of Congress. I know Ron Paul has questioned Bernanke over and over about the definition of Inflation and the role the Fed plays, but has anyone brought this to Bernanke's attention http://www.lewrockwell.com/orig10/voorhees1.1.1.html ?
Btw, I strongly encourage you guys to forward the link to anyone you know, so we can destroy the notion that most people have that a central bank can somehow fight inflation.
I am really curious to hear his response, and how, in light of these facts, he would try to defend the idea that the fed promotes stable prices (the idea that inflation of around 2% can be considered 'stable' is ludicrous to me).
Thoughts??
You'll get a whole lot of meaningless jargon and some models thrown at you which 'prove', despite what reality would tell anyone without their head firmly rammed up their ass, that this is not the case.
It's amazing how technological innovation can keep prices low in the face of this disaster by the Fed. If the dollar wasn't so weak, then imagine how much cheaper everything increasingly would have been over the last 95 years.
wilderness: It's amazing how technological innovation can keep prices low in the face of this disaster by the Fed. If the dollar wasn't so weak, then imagine how much cheaper everything increasingly would have been over the last 95 years.
A brand new laptop would be like $50.
To paraphrase Marc Faber: We're all doomed, but that doesn't mean that we can't make money in the process. Rabbi Lapin: "Let's make bricks!" Stephan Kinsella: "Say you and I both want to make a German chocolate cake."
If by stable prices you mean constant prices, then the Fed doesn't want that at all. The Fed targeted a stable growth path for the price level. Actually it's amazing how well it did. Those inflation figures are pretty much what the Fed wanted. Currently, there is controversy over what target the Fed should use now because its current practices make it prone to liquidity traps.
consequentialist.wordpress.com
The CPI is biased. True inflation is much higher.
Whenever Ben Bernanke talks about inflation, he means CPI-inflation.
True inflation is measured by:
I have my own blog at FSK's Guide to Reality. Let me know if you like it.
fsk: The CPI is biased. True inflation is much higher. Whenever Ben Bernanke talks about inflation, he means CPI-inflation. True inflation is measured by: M2 (around 8%-9%) reconstructed M3 (15%-20%) the price of gold (20%-30%)
It's curious how inflation moves around the economy and doesn't impact the whole economy as greatly as other aspects of the economy unless a national inflation occurs like Zimbabwe. Does anybody know how inflation moves around and may even hover in one sector of the economy for years and not greatly impact other sectors of the economy? For instance I think the health care industry is currently experiencing inflation and has been for decades yet it's impact is greater than say the price of furniture. But I don't know how to measure "greater"...
wilderness:For instance I think the health care industry is currently experiencing inflation and has been for decades yet it's impact is greater than say the price of furniture. But I don't know how to measure "greater"...
Health care costs are not rising because of monetary growth. Also, many prices are affected instantly by increases in the momey supply, through nominal growth expectations.
The CPI was designed to measure cost of living increases - the type of inflation that affects that average person. Yeah, its not perfect, but if it understates inflation it would only be by about 1%-1.5%. Tell me why you think it is so horrible a measure.
It's useless to define inflation by simply the increase in the supply of money. You need to know the demand for money as well.
No subject is so much discussed today—or so little understood—as inflation. The politicians in Washington talk of it as if it were some horrible visitation from without, over which they had no control—like a flood, a foreign invasion, or a plague. It is something they are always promising to "fight"—if Congress or the people will only give them the"weapons" or "a strong law" to do the job. Yet the plain truth is that our political leaders have brought on inflation by their own money and fiscal policies. They are promising to fight with their right hand the conditions brought on with their left.
Inflation, always and everywhere, is primarily caused byan increase in the supply of money and credit. In fact,inflation is the increase in the supply of money and credit. If you turn to the American College Dictionary, for example,you will find the first definition of inflation given as follows: "Undue expansion or increase of the currency of a country, esp. by the issuing of paper money not redeemable in specie."
In recent years, however, the term has come to be used in a radically different sense. This is recognized in the second definition given by the American College Dictionary: "A substantial rise of prices caused by an undue expansion in paper money or bank credit."
Now obviously a rise of prices caused by an expansion of the money supply is not the same thing as the expansion of the money supply itself. A cause or condition is clearly not identical with one of its consequences. The use of the word "inflation" with these two quite different meanings leads to endless confusion.
The word "inflation" originally applied solely to the quantity of money. It meant that the volume of money wasinflated, blown up, overextended. It is not mere pedantry to insist that the word should be used only in its originalmeaning. To use it to mean "a rise in prices" is to deflect attention away from the real cause of inflation and the real cure for it.
--Hazlitt
Where there is no property there is no justice; a proposition as certain as any demonstration in Euclid
Fools! not to see that what they madly desire would be a calamity to them as no hands but their own could bring
For instance, the housing bubble. That was inflation (increase supply of money via credit). I'm thinking the health care system is now in a bubble caused by government regulations and subsidies (increased credit). I was thinking this and then Ron P. and now Peter Schiff are saying the same thing. Like the housing bubble and dot.com bubble, I'm thinking the same thing is going on in the health care insurance field but I haven't heard much on this outside of mentions by those two.