By Robert P. Murphy
Last week the Fed announced "Operation Twist," in which the central bank will buy $400 billion of longer-dated Treasury securities while selling the same amount of shorter-dated Treasuries. This episode epitomizes everything that is wrong with the modern, statist view of money.
The Goofy Name
Just the fact that it's an "operation" is disturbing. Ever since the crisis began, officials have deployed the military metaphor since their only solution to social problems is to start blowing things up. We have a war on poverty, a war on drugs, a war on terrorism, and (since 2008) we've had an undeclared war on the recession.
The military metaphor is crystal clear whenever analysts discuss the Fed's options to "help" the economy, since interest rates are already at zero. Typically these analysts reassure their readers or viewers by declaring, "The Fed still has plenty of ammunition." Don't worry kids, we won't end Operation Enduring Inflation until every last unemployed person is eliminated.
Central Planning
It continues to amaze me that Austrian economists are apparently the only ones who think market prices mean something. In general, when we're just discussing the generic "interest rate," Austrians explain that it helps coordinate production and consumption activities over time. When the central bank gives us an artificially low interest rate, things get messed up — consumers don't… (Read on)
Source: Mises.org
No comments:
Post a Comment