I'm not sure you saw this post by David Andolfatto reacting to Ron Paul's comments that the Fed can create money "out of thin air"?
-H/T Economist's view.
Just in case you missed it, it is worth a "touche" chuckle.
If you just want the Cliff Notes money shot:
"But I am missing the point: The Fed has the ability to create money "out of thin air!" Whenever I hear this expression, I chuckle. We all have the power to create debt out of "thin air." When Microsoft creates shares to finance an acquisition, it creates the shares "out of thin air." If you bum a beer from a friend and promise to repay him next week, you create a debt obligation "out of thin air." Ooooo..."out of thin air!"
PS- Do you think Ron Paul has a response? I don't follow Paul closely though I do find he has certain endearing qualities. How can you not admire someone who votes "no" 95% of the time? Predictability can be good.
Bonds And Money
1 year ago
10 comments:
Ron Paul, who I was once sympathetic to, is the political equivalent of the proverbial "Bridge to Nowhere." For all the whiny voiced noise he makes, a more feckless critic of The Federal Reserve would be hard to find. Over the years there have been so many things he could have and should have done regarding The Federal Reserve, but instead, he has been mostly content to issue tiresome diatribes to the likes of Alan Greenspan and Ben Bernanke.
Putting aside the problems with "creating money out of thin air" aka fractional reserve banking, The Fed should be fully audited because it is almost certain that they have vastly overstepped their remit, and would be shut down upon modestly close examination. They are going the way of the dodo bird in any case, as is their signature franchise product, FRNs.
I admit I agree with almost everything that Paul says as at heart I believe in small govt. and non-aggression.This is neither of the two current parties in any way shape or form. That being said, as one poster remarks is not the difference being Microsoft gets money from someone that already has it as apposed to just "creating" it? Am I over simplifying this?
When you create a debt, you are creating money
Money is really at some level nothing but trust
Re: Ron Paul
The only president to ever cut the size of the federal government as a % of GDP in my lifetime was Bill Clinton.
Now you know where I stand on Ron Paul. ;-)
Stephan Karlsson has an interesting response to this post I hadn't really thought of.
I think he is correct and the legalization of counterfeiting analogy is more appropriate analogy that the "out of thin air" example since the money was already created.
Austrians win again
So in some respect you admit Dr Paul is more right than wrong?
By the way can you really give Clinton credit for that? Could you not give credit to a Republican congress or really I think more accurately the boom times he ruled in?
I think you're right that the Republican congress gets as much credit.
Boom times "yes" but when the economy was growing under Regan, Bush I, Bush II, etc... we had growth and yet government as a % of GDP increased on top of this growth.
It is a bit much to give one man credit for everything, nor do I actually think one person has that much influence, even if that on person is president; the democratic process is simply too "diffuse"
But he was there when it happened and he has been the only one.
And yes
While I see we can all produce credit, we are not allowed to counterfeit for that credit in the way the Federal Reserve can.
I stand 100% corrected
Well that makes sense and I will offer that up the next time I hear someone bashing bill Clinton. Thanks
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