The Painful Truth of It

Some day, you'll appreciate this opportunity to quit filling your head with nonsense.

The Washington Post — Shilling for economic illiteracy and picking the pockets of the poor


Classify this column (URL as ample evidence that The Washington Post must think its readers are idiots. In the piece, Jonathan Bernstein writes:

“In the ‘elections have consequences’ department, add today’s announcement by the Federal Reserve that it will not only tolerate somewhat more inflation, but will do so until unemployment drops below 6.5 percent. It’s a decision that pushes the Fed more and more in the direction of liberal economists who have supported monetary policy designed to encourage economic growth, not fight inflation.”

First of all, before the election, the Obama administration was falsifying figures to give the impression that unemployment was below 8.0%, which it wasn’t. Now the Fed is taking the inflationary route, since everything the Obama administration has done for the last 4 years obviously has not worked.

While Bernstein argues that this is a victory for liberal economics, that’s easy to say in the abstract, before actual people pay with the devaluation of their life savings and the universal hit that everyone, not just the rich, end up paying in higher prices across-the-board.  Just yesterday economist Thomas Sowell wrote the following about this very subject:

“Inflation transfers a percentage of everybody’s wealth to a government that expands the money supply. Moreover, inflation takes the same percentage from the poorest person in the country as it does from the richest. That’s not all. Income taxes only transfer money from your current income to the government, but it does not touch whatever money you may have saved over the years. With inflation, the government takes the same cut out of both. It is bad enough when the poorest have to turn over the same share of their assets to the government as the richest do, but it is grotesque when the government puts a bigger bite on the poorest. This can happen because the rich can more easily convert their assets from money into things like real estate, gold or other assets whose value rises with inflation. But a welfare mother is unlikely to be able to buy real estate or gold. She can put a few dollars aside in a jar somewhere. But wherever she may hide it, inflation can steal value from it without having to lay a hand on it. No wonder the Federal Reserve uses fancy words like ‘quantitative easing,’ instead of saying in plain English that they are essentially just printing more money.”

It’s not a victory for any kind of economics when the Fed adopts the strategy used by Germany in the Weimar Republic. It’s just wrong.


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This entry was posted on December 13, 2012 by and tagged , , , , , , .


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