Monday, 2 March 2009

Game of Chess Lost by Whole Generation

"You've got some economists and some folks who think they're economists. By the way, these days everybody thinks they're economists"
Barack Obama

Timothy Geithner, David Cutler, Robert Rubin, Elizabeth Duke, Edmund Phelps, James Galbraith, Jason Furman, Joseph Stiglitz, Austan Goolsbee, Gene Sperling, Donald Kohn, Jared Bernstein, Heidi Hartmann, Karen Kornbluh, Robert Solow, Jeff Liebman, Larry Summers, Dan McFadden, Brad Delong, Robert Reich, Daniel Tarullo, Richard Thaler, David Romer, Kevin Warsh, Christina Romer, Ben Bernanke and Alan Greenspan.

All these top figures along with the rank and file of mainstream economists believe in credit expansion. All these grandmas and grandpas believe in Keynesian dogmatism. None of them questions the existence of fiat money nor sins of central banking. Everybody else doesn't need a Ph.D. in economics to start pointing fingers at them. Those old folks have built a failure system and, by preventing its due collapse, want to drag everybody down. Nobel Prize intellectually deficient people will never allow free market capitalism free from government-created money. Look below at what kind of utter nonsense these 'top economists' are capable of.

In the fall of 1999, US central bank (Fed) officials gathered to talk about deflation: What would they do if faced with deflation, or widespread falling prices, and they already had cut interest rates to zero? Deflation is dangerous because it makes it hard to boost the economy by cutting interest rates, and because it makes debt harder to repay. At this meeting, researchers brainstormed about possible ways the Fed could spur spending, such as adding a magnetic strip to dollar bills that would cause their value to drop the longer they stayed in one's wallet.
Other proposals, some possibly not legal, were for the Fed to lend to private companies or buy things such as stocks, real estate or even goods and services, such as used cars. And then there are those magnetic strips. Marvin Goodfriend, a top economist at the Richmond Fed, proposed at the Woodstock conference that a way to stimulate the economy if interest rates are already at zero is to levy a fee on banks that keep cash on deposit with the Fed rather than lending it out, and to find a way to make currency worth less the longer it goes unspent -- thus the magnetic strips. When someone deposited a bank note, a "carry tax" would be deducted according to how long it had been since it was withdrawn. These charges for holding on to cash would effectively create negative interest rates. "Asking people to carry around some one-dollar bills that are worth 99.4 cents and some that are worth 98.4 cents would be a terrible nuisance," Alan Blinder, a former Fed vice chairman, observed at the Woodstock meeting. He added, "Prevention is far better than the cure."
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