Just Say No

Despite Bernanke's poor choice of words, doesn't he agree with the idea that inflation is created by printing too much money?

Maybe I'm forgetting my info.

Brian - Yep. He pretty much agrees with the Austrian diagnosis, though since his big thing is inflation targeting, he's obviously a little more comfortable with it than a hardline Austrian would be.

This is a maddening topic -- everyone seems so totally resigned to inflation of the money supply even in the face of simple math because it's politically difficult, much like the oncoming fiscal trainwreck due to federal entitlement programs. So everyone just keeps kicking the can down the road. Ugh.

How bout them full employment.

Brian -

From a post by Jeffrey Tucker quoting Bernanke at the Mises blog:

The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.

(It sounds like Bernanke sees this as a positive.)

Jonathan,

Bernanke --

The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.

Wishful thinking. The printing and distribution of new money cannot always keep up with the collapses of the banks and their reputations.

Regards, Don