The Federal Reserve is undergoing what former central bank governor Frederic Mishkin is calling an unprecedented level of attacks caused by its inability to articulate a clear message regarding its multitrillion-dollar monetary policies. In a CNBC interview, Mishkin said the Fed has done a poor job justifying its efforts to buy Treasurys and other securities as a way to stimulate the economy—a policy often referred to as quantitative easing. Full article and interview from CNBC.
Source link: http://blog.mises.org/14718/credibility-of-the-fed-under-historic-attack-mishkin/
‘Credibility of the Fed’ Under Historic Attack: Mishkin
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Mishkin is your typical inflationary crank that repeats all of the same confusions that have already been refuted long ago, in the 18th and 20th centuries. He still adheres to and is the major proponent of the magic theory of money. The man literally believes that inflation has magical powers ala Silvio Gesell and John Maynard Keynes. One merely needs to read his textbook, specifically chapter 23 (The Transmission Mechanisms of Monetary Policy) in order to understand why we’re in the condition that we’re in today. (Remember, he’s trying to explain the stimulative effects of inflation).
Inflation reduces interest rates which increases consumption (aggregate demand).
Inflation reduces interest rates which increases investment.
Inflation yields currency depreciation relative to other currencies which increases your current account balance (more exports—a more “favorable” balance of trade).
Inflation increases asset values which (a) helps bank balance sheets, (b) allows firms to obtain more funds for capital investment (Tobin’s Q), and (c) makes people wealthier (wealth effect).
Inflation reduces the problem of adverse selection. This, in turn, causes consumers to spend more and lenders to lend more.
If only he was aware of the fact that the “stimulative” effects he’s referring to are only short-term phenomena, brought about by monetary and inter-temporal disequilibrium, that must and inevitably will bring about a major economic calamity (like the one we’re in today).
Totally clueless.
As the Little Brown Bear said:
“The only thing deflating is the Fed’s credibility”.
About time.
Actually, I think the Fed has been doing a pretty fair job articulating it’s policies… Which is why people are attacking it!
Watch Fred “Napoleon Dynamite” Mishkin In Dire Need Of A Diaper Change (1min 54secs) via ZeroHedge.
Obama used the same lame excuse in explaining his party’s bloodbath at the polls a few weeks ago. To these egomaniacs, their ideas are always sound. Only the communication needs tweaking. “If only I had communicated things more clearly, the rubes would see the light and we’d have heaven on earth.”
Well, they’re paving us a road to hell with their policies. Protect yourself from these blowhards, or you’ll be roadkill.
Typical. The problem isn’t with The Feds ability to convey it’s message. The problem is that some people understand that message all to well.
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