7/21/09

Ron Paul lectures Ben Bernanke



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2 comments:

  1. Hey aren't they both right? Bernanke and Paul? Paul is right, because by doubling the money supply, something was devalued. But isn't Bernanke correct that our prices are stable? I think they are both correct. I think what doubling the money supply did, was devalue the lenders' money. The fed manufactured a bunch of money, but the demand was up for the dollar, and so as the demand curve went up, so did the supply curve. Which leads to the question, what was devalued? I'm thinking it was the lenders' money. Am I completely off base?
    -KP (WCS)

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  2. When we talk about demand for the dollar we're talking about the value of the dollar on the international exchange. Domestically, demand for dollars only rises when there is economic growth where there are more goods and services. There has been no economic growth.

    Also price levels are a poor measure of inflation. If prices should be coming down significantly because of recession, and instead they are going up slightly, this represents significant inflation even though prices aren't rising much. Inflation is merely the increase of the money supply. Regardless of whether prices go up or not, increasing the money supply distorts economic outcomes because it sends false messages to the markets.

    That's my take on this complicated topic, taking my cue from Austrian theory.

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