That's not always a bad thing. The Great depression was caused by money being worth too much.
Opinionson the Chris Christie/CPAC issue
- Thread starter tecoyah
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That's not always a bad thing. The Great depression was caused by money being worth too much.
Yes, it does a lot actually. And a 2% inflation target is a very low level of inflation. Since you can never perfectly hit an inflation target, it is good to have that 2% cushion from 0 and deflation because the bounce from inflation to deflation and back again is really the most devastating thing we could probably have. Since the stable value of money matters more in the short run than the long, a low inflation target is probably the best way to go.
This isn't about control of the economy unless you are suggesting that there should be no legal currency or government controlled money.
This goes hand in hand with what I said. The Fed's monetary policy was too tight during the depression- we needed greater inflation. Milton Friedman wrote about this and I believe was the first one to show how the depression was very much a monetary policy consequence and not just a fiscally driven event. Bernanke of course studied the Depression greatly during his academic years and holds a similar view, hence his support of QE, etc.
So you are for free banking? Not a lot of support for that these days- virtually no politician in recent times minus probably Ron Paul has been for that. But I think intellectually it does bring up interesting questions. Personally, I don't think it would be a good idea though considering the information problems inherent to such a system. The Fed is much easier to trust and be transparent across a nation than a private issuer. Furthermore, and perhaps ironically if your argument is anti-inflationary, any private currency runs into the same issues the Fed does with inflation vs. deflation except they would have less resources and data at their fingertips to meet their target- this would probably mean they'd have to target an even higher inflation rate than the Fed does- either that or perhaps a deflation rate, but whether or not that could work is somewhat arguable. 0% inflation/deflation is still impossible in dynamic markets and given asymmetric and delayed information.
If the little sect within the GOP keeps this up, they could severely damage the long term prospects of their own party. As Rand Paul said in a recent interview, the party needs to embrace more diversity in viewpoints, etc. Banning pro-gay rights groups (which are conservative groups) from CPAC, shunning Christie, etc. is not the way to go about making the party successful again. But what do I care, I ditched them a while ago just because of this sort of nonsense- I'll watch from afar as an Independent voter while I hope the party gains some sense. But really, I don't expect them (or the other one) to any time soon.
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