Tuesday, April 5, 2011

San Francisco Economists Disgrace Their Profession

Reuven Glick and Sylvain LeDuc, two economists with the San Francisco Federal Reserve have just released a study finding that Fed asset purchases (also known as frantically printing money and throwing it at bankers) are actually deflationary. Not surprisingly, Bob Wenzel and Lew Rockwell call bulls&@t. We'd recommend Bob's takedown, as it exposes the laughably weak methodology behind the research (hint: it doesn't actually Fed asset purchases as an independent variable).

We think this is symptom of the Fed's level of anxiety these days. Remarkably (and in no small part due to the work of Ron Paul), criticism of the Fed is going somewhat mainstream. Enough people are aware of the Fed's role in the 2008 financial meltdown, and enough people are concerned about rising commodity prices, that the Creature from Jekyll Island is in the unfamiliar position of facing tough questions. Which leaves the central bank two options: be forthcoming about its activities and their effects, or lie about them. This study is just the Fed's way of lying.

So, Reuven and Sylvain, if you're trying to mislead the public, you really need to do better than this. This nonsense is not helping anyone take California seriously. Even those of us without advanced training in economics understand that a commodity becomes less valuable if it becomes massively less scarce. So please keep it to yourselves until you've got something better for us.


Post a Comment