Posted on 01/03/2011 7:01:08 AM PST by SeekAndFind
The best commentary on Fed policy currently out there is a do-it-yourself animated short called Quantitative Easing Explained. The 6-minute, 48-second cartoon features two stuffed animals, drawn in Pokémon style, talking about monetary policy. Specifically, the bears--or are they dogs?--point out the illogic in the official Federal Reserve position that today the danger of deflation is greater than that of inflation. The animals also criticize the Fed officials' recent pursuit of QE2, the acronym for its decision to inject $600 billion into the economy. More than 3.5 million people have watched the video, and it was posted on YouTube in November.
The big question is why a home movie gets through to people in a way that a million words of news commentary have not. The answer is that news commentary has been corrupted, perhaps irreversibly, by an attachment to economic theory. The first kind of theory at issue here is Keynesianism, which assumes that stimuli from government, a category that includes QE2, are beneficial. Keynesianism also assumes a tradeoff between unemployment and inflation. Finally, Keynesianism emphasizes the consumer (demand) at the expense of business (supply). Here are several typical Keynesian sentences that you hear or read in the traditional news.- Consumer spending makes up 70% of the economy.- Growth is coming, so that means we can expect inflation.- Federal spending or the Fed's easing will stimulate the economy.
Monetarism, another theory, has alsodone its share of corrupting. This theorysays that if something seems wrong inthe economy, the solution lies in adjusting the amount of money pumped into it.
These theories do not suffice to explain current events. If many prices are going up--as the video asks--why do we still call our money problem "deflation"?
(Excerpt) Read more at forbes.com ...
BTTT. I have seen this before and it is definitely worth watching again.
They just "might" understand when it's explained at this level.
I’ve always enjoyed this, but it’s is getting to be like The Ant and The Grasshopper. I wonder how many times a week someone send it to Rush.
Two many attorneys!!!!
Why don’t they just be honest with us and call it printing money?
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