Jewish World Review Nov. 24, 2010 / 17 Kislev, 5771
Helicopter Ben Whirls On
By Paul Greenberg
You'd think any country that had gone through hyperinflation would be aware of the dangers thereof. And you'd be right. No one has been more critical of this administration's inflationary policies than the Germans. They remember the hyperinflation of the
But that's the whole point of
Not just inflation but the expectation of inflation, says Doctor Bernanke, is a good thing. As he told a conference of fellow gurus at Jackson Hole (they always meet in the best places), "an increase in inflation expectations could become a benefit."
The great apostle of inflation in our time,
Professor Krugman is often described as a Keynesian, but that's a libel on John Maynard Keynes, who understood the dangers of inflation early on. (See his "The Economic Consequences of the Peace," published in 1919, for an early warning against what he called "inflationism.")
The great rhetorical advantage of the inflationists is that, if their policies don't work, and one economic stimulus after another fails to stimulate the economy, at least to the extent they promised, then they can explain it's only because not enough of their advice was taken. Not enough money was printed!
Much like the player at the roulette table who keeps doubling his bet every time he loses, the inflationist believes that all he has to do is double down and eventually he'll win a fortune. Of course it'll be in worthless currency by then, but why spoil the fun by mentioning that minor detail?
Inflation is the quick fix that doesn't fix, not for long. It's a remedy that only aggravates the disease. Lest we forget, it wasn't till the Reagan Recession drained the inflation out of the economy that the long-running Reagan Recovery began.
But try telling that to
Or as Dr. Bernanke once put it in an all too revealing footnote to an academic paper, "people know that inflation erodes the real value of the government's debt and, therefore, that it is in the interest of the government to create some inflation."
Now that he's chairman of the Fed, he can create a lot of it, and he doesn't need a helicopter to do it, just the authority to buy another
If anybody questions the wisdom of that approach --
Besides, these bonds are guaranteed, aren't they? Right. Just the way
To be fair, the president is scarcely unconcerned when it comes to matters fiscal and commercial. Just the other day, speaking from
If there's one thing this administration is out to supply in even greater abundance than ever cheaper dollars, it's unintentional irony.
Chairman Bernanke is a font of irony all by himself. Last weekend, he was lecturing the Chinese about how they're unbalancing the global economy by keeping their currency artificially low. Which is much the same policy he advocates for this country -- as the Chinese, Germans, Brazilians and others at the
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© 2006 Tribune Media Services, Inc.