Why do many economists apologize for the Counterfeiter of Last Resort, the Federal Reserve?
Why, when all pro-Federal Reserve propaganda is so easily exposed as inaccurate?
Answer:
Because economists are not scientists. They are "humanists" that rely on the so called common sense, unfounded assumptions, biased interpretations and correlations.
Tipical economist line of thought: The numer of pirates in the sea has been shrinking since the 1800, but worlwide temperatures are rising. Thus, average worlwide temperature is inversely proportional to the pirate population.
They also have great troubles understanding cause and effect. Like this: I had a cat that could predict the stock market. Every time he meowed the market went up, at least most of the time. Now my cat is dead and the market is down almost all the time. Did my cat predicted thye stock market or he CAUSED the stock market to behave?
They also believe you can do anything given enough capital, like extracting oil out of a depleted field.
Economists don't apologize for the Fed, because there is nothing to apologize for. Please, PLEASE expose all of the "inaccuracies" in any "propaganda" about the Fed. I would be glad to show you where you are wrong.
I am not saying the Fed is perfect, and no economist claims that either. What the Fed does is an extremely complex and high-risk job, but it needs doing. You can be as libertarian or Austrian as you want, but the Fed does not create inflation, it tries to control it. Inflation existed before the Fed, before central banks, before banks at all. It is a symptom of currency and money supplies.
But as I said, please show me these inaccuracies, either as an edit to this question, or as a new one. I will check back, but if you do make a new question, just shoot me an email through Y! and let me know so I don't miss it. Thanks.
P.S. Get off Ron Paul's website and go read a book. Start with this: http://www.blackwellpublishing.com/pdf/g...
Yes it is written by someone from the Fed (oooh, propaganda!), but it also happens to be right.
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For your additional comments...
So you're saying that we should just go back to passing around gold coins? And that the Fed counterfeits money even though they are not the ones that print money for the government? And that you can't have inflation in an economy based on gold/silver coin?
Well we can't go back to passing around gold coins because there is more recognized wealth in the world than there is gold to represent it, at least in a way that would be efficient at all. If you want the world economy to grind to a halt, I guess we can get rid of the Fed.
Like I said, the Fed is not the Treasury, they don't print money. They control the money supply by setting rates, which has nothing to do with currency. Again, so I'm clear, money supply is not the same as currency in circulation.
Finally, inflation is entirely possible with a gold/silver based system. How do you see there only being deflation in a gold/silver based system? If prices rise and your gold coin can only buy you a half a loaf of bread, instead of a whole loaf, that is inflation (well it's unstable prices, but we can equate them here). If the government decides to pump out some more gold coins so that there are twice as many in the economy, that is inflation.
And if you think that the government shouldn't be part of making the gold coins, well then how exactly do we get them? For that matter how does the government buy all the gold they don't own at this point to make all the coins (yes they own some, but not what they would need). Since dollars no longer exist, your job just gives you a sack of gold each week? How did they get their gold? Everyone that owns the gold now just decided they didn't want to be the new rich and distributed it evenly so that the economy just became a gold based economy?
Think these through and get back to me... I look forward to hearing from you.
It is very simple. As long as the inflation rate is low, then the Fed is probably doing a good job.
Most economists think that way because many economists believed in the past the only way to have growth was high inflation, and that there was this trade off between the two. Although it is better to err on the side of too much inflation rather than too little output growth, you cannot plan on x% inflation and y% output growth because people adapt to it.
You can't expect politicians to run the money supply just like you can't expect them to deliver the mail.
Now if you want to criticize the details of how the Fed makes money and so on, that is fine, but basically you want to judge the FED by the long run inflation rate, which, given errors, should be positive. I would like the FED to be more responsive to the government, but it is often a trade off - the more the FED should act in support of the public, the more th e politicians can corrupt it.
The Federal Reserve doesn't print money; they buy and sell bonds.
The Treasury department prints money.
I hope this helps you clear things up.
We hard hard currency then. Obviously, the fed reserve did not "print money" until we were economically depressed. What actually happened was the opposite. The money pooled into few hands and they wouldn't trade. With hard currency the government could not affect the worth of that money, making this an unattractive idea to those holding the paper.
Because that's where they get their income. FYI the Federal Reserve is a private company, not part of the government. It' profits go to very few, like the Rockefeller's and the Rothschild's.
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