December 20, 2007
Magan McArdle
. . . on Ron Paul's
exchange with Ben Bernake:
What Dr. Paul is saying doesn't make any particular sense: American consumers are not particularly suffering because of the decline of the dollar, the dollar is not declining because of Fed policy, and the Federal Reserve has nothing to do with a relative scarcity of oil and food, which is what is driving the CPI increases he complains about. If we were on the gold standard, oil and food would still be getting more expensive, and people on fixed incomes would still be feeling the pinch.
h/t to Insty, and special thanks to The Atlantic for having McArdle blog for them. It's good to see her writing showcased in the way it deserves.
Posted by: Attila Girl at
08:21 AM
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1
Consumers not hurt? Price of milk is up 23% this year. Gas is over $3 a gallon again.
Yeah nothing to worry about.
Posted by: Ed at December 20, 2007 09:56 AM (5EH59)
2
That isn't what she said.
Posted by: Attila Girl at December 20, 2007 03:42 PM (larLB)
3
If we were on the gold standard, oil and food would still be getting more expensive, and people on fixed incomes would still be feeling the pinch.
But this is patently untrue. If you consider what the price of gold has been doing while the value of the dollar has been plummeting--the dollar price of gold has risen together with the dollar price food and energy prices. This means that a gold-tied dollar would have been tracking the same direction resulting in no relative price change to food and energy.
Look, it is simple supply and demand. You print gobs more dollars and their value goes down.
It is not that food or oil has suddenly become more scarce causing price hikes. The dollar has become more plentiful at an ever accelerating rate (especially since the Fed stopped publishing M3), causing it's value to plummet.
And this is precisely the Fed's doing. Their policies have been directly and indirectly responsible for an explosion of monetized debt, and their flooding the credit markets with new credit in response to the sub-prime meltdown has only accelerated the problem.
As for whether consumers are suffering as a result of a declining dollar, they most certainly are. Oil is purchased with dollars. Dollars that are worth less require more to purchase the same amount of oil, resulting in higher gas prices, which in turn results in higher food prices as petroleum products are required in food production.
I would never never expect the central bankers to take the heat without a concerted effort to shift blame. I'm not at all surprised at this effort to obscure the real cause and effect.
Posted by: Desert Cat at December 21, 2007 12:14 PM (B2X7i)
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December 17, 2007
December 03, 2007
Professor Reynolds:
And Lou Dobbs slouches nearer, his moment come 'round at last . . . .
Nice. This is in reference to a mention of "Joel Kotkin and Fred Siegel on the Gentry Liberals: 'Over the last half a century, liberals have moved from strong support for basic middle-class concerns—epitomized by the New Deal and the G.I. Bill—to policies that reflect the concerns and prejudices of ever more elite interests.'"
Yup. They sure have.
Posted by: Attila Girl at
12:11 AM
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