This is an entertaining video put out by the European Central Bank. It discusses what inflation is and how it can be controlled. But it is entertaining on a number of levels, not the least of which is that it is shot through with subtle fallacies and self-serving avoidance of the topic of what it is, precisely, that creates new money. It also completely misconstrues interest rates, which are said here to be nothing but the price of money established by the central bank.
Still, the video is irresistable. Thanks to Seth Daniels for sending it in.
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I showed the cartoon clip to my kids, girls aged
3 and 7. Asking my older one what she took away from it, she said that the inflation monster giving out money hurts people. She didn’t mention the deflation monster. The scene with the inflation monster is great and memorable. The scene at the end with the central banker and the deflation monster is not memorable. It’s clear that they were unable to create a scene that shows the negative effects of deflation.
Thanks for the video despite the fact it spoiled my day. Always scary to watch statist propaganda. What a bunch of crooks!
As if CPI was the right evidence of inflation; what about steady growth of the money supply! The cartoon does not even care to observe that central banks and government create inflation. Shame on the guys who produced that piece of disinformation.
This is one of the most awful propaganda movies I’ve seen recently. It is almost as awful as movies from the socialist times in Poland. It sells the myth that inflation is lower nowadays than it was centuries ago.
And the idea is that inflation is some kind of a ghost. That it is a “monster” which needs to be watched. They also messed things up with the interest rate saying that it’s the “price for money”.
Film’s theory of deflations is very Keynesian.
But the worst myth is that market needs a central bank, and its “job” is to keep prices stable and fight the evil monster.
What is really needed is a final scene, where the central banker is revealed to be the inflation monster in disguise…
So if interest rates are not the price of money, what are they? And how should the film have portrayed them?
The interest rate is ‘the discount in the valuation of future goods as against that of present goods.’ Or really just the difference in the valuation of future and present goods (Mises).
OOhh, there’s also a pupil’s leaflet and teacher’s booklet to go along with this wonderfully produced video (http://www.ecb.int/home/html/educational.en.html). Did you know that, according to the leaflet, if you and all your friends want the same CD and there’s only one left in the store, the store owner will jack up the price and therefore we will have higher inflation? Astounding! I couldn’t imagine getting another Coldplay CD anywhere else or at any other time. I guess I’ll have to pay that inflated price to the greedy store owner if I ever want that CD. And if energy prices go up, then that CD will be more expensive to transport, and the greedy store owner will pass that cost onto me, thereby raising inflation more. I’m glad the ECB taught me about demand-push and cost-push inflation in such a hip way. I would have continued to think that inflation was an increase in the money supply had it not been “clarified” by using a music store analogy that us 20-something’s could understand. I’m glad the government is around to teach me difficult concepts in ways I can understand.
The theory in this story seems to be:
When there are too many fishes on the market and prices start to fall, people are not hungry any more!
I like the idea of the kids falling asleep because they must listen to the mindless propaganda discourse from their teacher though…
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