Thomas J. Gordon

The Foundations of the Current Crisis: Don't Shoot the Messenger

I understand the comments of people who think that no good can come of creating paper/electronic money in excess. Intuitively I buy what you're saying. How can it create real economic wealth to simply print extra money? But I am saying a hard money, no caca, person like Milton Friedman did find at least one case where he was for a rapid expansion of the money supply. We should ask Anna Schwarz, she's still alive.

The Foundations of the Current Crisis: Don't Shoot the Messenger

Paco, if we're taking off the economic gloves, here let's go at it. When a financial panic like q42008 happens, velocity drops like a brick. MV=PQ. A no caca (spanish), hard money, person like Miltion Friedman begged the Federal Reserve in the 30's to expand the money supply in response to the financial panic of 1929. Friedman said the decrease in the money supply of 30% between 1929 to 1930 was a big cause of the Great Depression. So I would argue that Bernanke was just not making an earlier, revealed mistake.

The Foundations of the Current Crisis: Don't Shoot the Messenger

sorry I meant "1990 to the current time"

The Foundations of the Current Crisis: Don't Shoot the Messenger

austrian63, I don't know. We have a political and economic system. Would you prefer a person like Greenspan stay out because that system doesn't meet the standards of a pure free market person? He got in, he got his hands dirty, he got some of what he wanted, and he lost a few. I would argue that from 1980 to the current time there has been no bothersome inflation. I give Greenspan and Bernanke some credit for that. A lot of the people on seeking alpha want a stable currency and I would argue for that time period they got it. (I know we've got problems coming.). I'd rather have Greenspan and Bernanke then Barney Frank or Paul Krugman.

The Foundations of the Current Crisis: Don't Shoot the Messenger

Grumley, good comments. Paco mentions above that this is what we asked for. Not every voter has the economic saavy of a seeking alpha reader/author. I personally find almost no one voiting for someone because they want to balance the budget. Over time, the u.s. voters have resisted to urge to rob the rich through taxes, and give themselves perks from the gov't purse, better than most nations. I personally think this is why by 1990 the u.s. was the worlds' economic and military super power. We have msft, goog, csco and intc because there are still rewards for hard work, risk taking, and innovation. in the last 50 yrs only reagan was able to get his party elected 3 times in a row. bush had 8 yrs and then lost but there will be other elections. so there's my patritotic comment.

The Foundations of the Current Crisis: Don't Shoot the Messenger

I will spend a brief moment defending Bernanke here. He didnt' make the decision that the federal gov't spend massively in excess of the tax take. I am long tbt and I follow Paco so I like a lot of what he says. But many of these discussions demonize Greenspan and Bernanke and I don't know if I buy it. I don't think they have some secret agenda to debase the currency, for which they get some kind of personal financial reward. Greenspan has many and high quality free market credentials. I say in one of my articles that he drank tea in Ayn Rand's apartment. If the federal gov't was spending only what they take in in taxes I don't think they would even think about expanding the money supply. Yesterday Bernanke took political risk by reading Obama/congress the riot act about deficit spending. I personally give the guy some credit.

The Foundations of the Current Crisis: Don't Shoot the Messenger

Paco, Yesterday Bernanke said "The Fed will not monetize the national debt". Do you have any comment on that?

Nothing About This Economy Is Surprising

I find many free market advocates are getting really confused. What happened in late 2008 was not a libertarian moment. It pushed the country into electing the most socialist president in a long time. The man on the street has largely come to the wrong conclusion that Greenspan/Bush free market tendencies caused the Financial Panic of 2008.. In making your arguments you have to hit the advocates of bigger gov't squarely between the eyes as I did with my "Did the Government Break Our Leg and Offer us a Crutch" article. What is interesting is in other countries (Britain and Australia) the sitting govt's are what we would consider advocates of larger government, and Brown and Rudd are in trouble based on poor economic performance.