Brian Coleman

Austrian School of Economics: Not Tough Enough

Tim Walsh- You wrote that "The Federal Reserve and the Federal government don't just print and spend money, not even now. It simply doesn't work that way. The Federal Reserve only creates money to satisfy demand and keep prices stable. The Federal government only spends what it is able to raise through either taxes or selling Treasury notes. Deficit spending may or may not have any effect on aggregate demand, but it does NOT cause inflation."

Perhaps you missed the announcement by the Fed that it is going to print money and buy treasuries? The size of this stated program exceeds the current monetary base. The Fed prints money to buy newly issued treasuries...this is identical to the Fed's behaviour in the 1970's when the gold window was closed. They monetized the spending associated with The Great Society and Vietnam War and created a massive inflation. We appear to be on the same track unless the Fed has some exit strategy they are keeping to themselves.

How 100 Gigabit Ethernet Markets Will Differ from 10

"And the problem is that Cisco is 60-70% of the market, they use ASICs, and will always use ASICs for high volume applications so long as they are 60-70% of the market."

Andrew, that comment can only be true as long as your definition of "high volume applications" excludes the Series 7600, Cat 6500, Cat 4500, and the new ASR 9000 all of which are using programmable NPUs from EZchip and not ASICs. EZCH is claiming a total of 50 design wins at Cisco and Juniper combined; clearly programmability is winning out over ASICs in a host of designs. I'm not sure what your adamancy on this point is based on unless it is just the semantics over the defintion of "high volume."

Oil Shocks Aren't Necessarily Inflationary

No, oil did go up in the 1970s because of inflation. Its just easier for government to point to the Iranians as the boogie man that was the source of all of our problems rather than examine bad government policies. Not all that different than Arab countries blaming Israel for their problems instead of restructuring their economies. In the 1970s when the dollar became de-linked from gold and therefore a fiat currency unmoored from anything tangible the Fed printed massive amounts of currency. The Saudi's as any rational person would do said if you are going to pay us in devalued currency pay us more of it. Prior to the dollar-gold peg being broken, the price of oil was a constant $3.50 a barrel. It was only when the dollar's value became variable that the nominal value of oil also became variable. Pointing to Oil Embargos and the Iranian Revolution is just a convenient distraction from the real problem which was incompetent monetary policy. Afterall, did the Iranian revolution cause copper, silver, lumber and the entire commodities complex to be revalued up? Of course not, the debasement of the currency caused that.