slash22
Member
Pretty interesting article, not saying i agree with it but anyway
Alas, the notion arose in the late 19th and early 20th centuries that
if wise men could have "flexibility" in issuing money without the
constraints of its being tied to the supply of gold, or even silver,
they could rid us of financial panics, the business cycle and other
human ailments! John Maynard Keynes and others thought that if the
economy looked to be slowing you should just churn out more money, like
putting more logs on a flickering fire, and do the opposite if things
looked to be overheating. But manipulating the amount of money or the
cost of it, à la the Fed's fixing interest rates, gets in the way of
prosperity. It does not facilitate prosperity but retards it. There is
no way a handful of people--wise or unwise--in government and central
banks can second-guess what markets made up of billions of people might
need. We are living through a disaster that is the result of the latest
Greenspan/Bernanke attempts to guide our economic destiny through
central bank operations.
Imagine if the government decided to
increase the number of minutes in an hour from 60 to 70. You can hear
policymakers congratulating themselves: "People will work longer at the
same pay. This will be a boon to productivity!" Or if Washington
increased the number of inches in a foot from 12 to 15: "Home buyers
will thus get more house for the same price and that will stimulate home
buying!" Preposterous? It's no more foolish than what we and other
countries routinely do with our currencies.
from:
http://www.forbes.com/forbes/2010/0510/opinions-steve-forbes-fact-comment-short-money-treatise.html
Alas, the notion arose in the late 19th and early 20th centuries that
if wise men could have "flexibility" in issuing money without the
constraints of its being tied to the supply of gold, or even silver,
they could rid us of financial panics, the business cycle and other
human ailments! John Maynard Keynes and others thought that if the
economy looked to be slowing you should just churn out more money, like
putting more logs on a flickering fire, and do the opposite if things
looked to be overheating. But manipulating the amount of money or the
cost of it, à la the Fed's fixing interest rates, gets in the way of
prosperity. It does not facilitate prosperity but retards it. There is
no way a handful of people--wise or unwise--in government and central
banks can second-guess what markets made up of billions of people might
need. We are living through a disaster that is the result of the latest
Greenspan/Bernanke attempts to guide our economic destiny through
central bank operations.
Imagine if the government decided to
increase the number of minutes in an hour from 60 to 70. You can hear
policymakers congratulating themselves: "People will work longer at the
same pay. This will be a boon to productivity!" Or if Washington
increased the number of inches in a foot from 12 to 15: "Home buyers
will thus get more house for the same price and that will stimulate home
buying!" Preposterous? It's no more foolish than what we and other
countries routinely do with our currencies.
from:
http://www.forbes.com/forbes/2010/0510/opinions-steve-forbes-fact-comment-short-money-treatise.html