[OT] Ameros will clog the tubes - was Re: Network Neutrality

Levi Pearson levi at cold.org
Fri Dec 5 22:40:52 MST 2008


Andy Bradford <amb-plugg at bradfords.org> writes:

> Thus said Von Fugal on Fri, 05 Dec 2008 11:39:59 MST:
>
>> I'm  not  at all  surprised  that's  what  is  taught. But  that's  my
>> conspiracy side coming in, so I'll be quiet now. ;)
>
> It's no conspiracy really that government (and hence government schools;
> which oddly enough doesn't apply to BYU) favors a school of thought that
> allows for an inflationary monetary policy. What I find ironic about the
> whole situation  is that the  Federal Reserve is tasked  with ``fighting
> inflation,''  which  is  caused  by  none  other  than  Federal  Reserve
> policies.

I read today an article by Ben Bernanke that explains why the Fed (and
pretty much all central banks) aim for a small amount of inflation.
First of all, the Fed's biggest tool is controlling the base interest
rate.  If the economy is in deflation, then there's nowhere to lower the
interest rate without making the effective rate negative.  So, a small
amount of inflation allows the Fed to act in prevention of a
deflationary trend before its primary tool becomes ineffective.

http://www.federalreserve.gov/BOARDDOCS/SPEECHES/2002/20021121/default.htm

Milton Friedman, as I said in another email, proposed a fixed monetary
rule that would peg the money supply at a fixed, known rate of
inflation.  He was certainly not in any government/banking conspiracy.
You might want to consider looking at his reasoning instead of
dismissing anything not approved by the Austrian school out of hand.

                --Levi



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