Monetary policy

Nov 202010

Timmy Geithner is not only an accomplished tax evader, but he’s pretty good at political demagoguery, too. From Bloomberg:

U.S. Treasury Secretary Timothy F. Geithner said the Obama administration would oppose any effort to strip the Federal Reserve of its mandate to pursue full employment and warned Republicans against politicizing the central bank.

“It is very important to keep politics out of monetary policy,” Geithner said in an interview airing on Bloomberg Television’s “Political Capital with Al Hunt” this weekend. “You want to be very careful not to take steps that hurt our credibility.”

Not everyone would have the skills to criticize an effort to unpoliticize the Fed on the grounds that they shouldn’t politicize the Fed.

Of course, Geithner shouldn’t get all the credit. Al Hunt’s people helped, too, by not laughing out loud.

But to think, some people criticized the Tea Partier who is supposed to have said, “Keep your government hands off my medicare.” Maybe the Partier was just auditioning for a job in the Treasury Department.

Nov 102010

Remember all of those articles from the early-mid Bush administration days asking, “Why do they hate us?” Now we’re beginning to understand:

(Reuters) – Germany’s undiplomatic outbursts against U.S. policy, calling it “clueless” before a G20 summit, show growing estrangement on economics as America’s focus shifts away from transatlantic ties to domestic challenges and Asia.

“The Atlantic is getting wider,” said Anton Boerner, head of Germany’s Foreign Trade Association, who spoke of a “creeping alienation” between America and Europe, which has been exacerbated by the global financial crisis. [URL]

And there’s a related headline on the same page:

Obama returns fire after China slams Fed’s move

Nov 062010

I posted the following note in response to the WSJ article, “Bernanke Stands by Fed’s Moves.”

It’s time to retire the dollar as a unit of exchange. Instead, we should institute a new currency called the Bernanke. There is no need to design separate 1-Bernanke, 5-Bernanke, and 20-Bernanke notes. Those numbers are meaningless, anyway. Print the notes without numbers. Prices can be given in units like handfuls — 5 gallons of gas might cost you two fistsful of Bernankes. A car might cost you a hundred bushels of Bernankes. It doesn’t really matter, since they will be basically worthless.

Sep 232010

A few days ago I pulled a book that I had not read from our living room bookshelves: “The Great Wave : Price Revolutions and the Rhythm of History” by David Hackett Fischer (1996).

Then I saw sticky notes in the first part of the book. Apparently I had once started to read it. But now, after re-reading the parts I had already read, I have to say that I remember nothing of it. The passages that were sticky-noted are relevant to my interests and don’t have much to do with the main thrust of the book.

How such an interesting book could have made absolutely no impression on me, I cannot explain. But it’s impressing me now.

One of the take-home lessons after reading the first part about the Medieval Price Revolution seems to be that periods of price revolution, i.e. price increase, are periods of growing inequality between rich and poor. So if that trend holds, it means the U.S. government’s recent stimulus programs will make the rich richer and the poor poorer.

That doesn’t surprise me one bit. But I don’t know yet how to reconcile this information with what we have been told in history books about how populists tend to favor inflation because it allows poor debtors to pay off their rich creditors with debased money.