What to do When Ben Stein Teaches Economics

Rick Perry's focus on Fed money printing as evil is right out of Ron Paul's manual on how to start getting the country back on track and away from policies that are destroying the country. Though Perry seems to be only concerned that the Fed might pump money into the economy during the presidential race, which would create a false boom and help President Obama's re-election prospects. The Fed is very evil and Perry's pointing this out, though limited and not as consistent and deeply grounded as Ron Paul's view on the Fed, is welcome.

Federal Reserve money printing is evil on many levels. It allows the U.S. government to spend enormous amounts of money it wouldn't otherwise be able to spend, since the Fed buys up a huge chunk of the debt being issued by the Treasury.

Fed money printing distorts the structure of the economy pushing money into the capital goods sector of the economy (such as the housing market and stock market). This leads to the boom and bust cycle.

And finally, Fed money printing results in price inflation.

Despite these many evils, neo-con Ben Stein loves the Fed and is upset that Perry has attacked this Temple of Money Printers:

I was going to leave you alone for this month and just spend it on my boat up at Lake Pendoreille in North Idaho, a mountain lake where ospreys soar and where I feel at peace.

But Governor Rick Perry of Texas - possibly the nation's next President - has shocked me out of my reverie.

A few days ago, Governor Perry said in campaigning in Iowa that it would be something akin to "treason" for the head of the Federal Reserve Board, Professor Ben Bernanke, to "print" more money between now and Election Day.

That, said Gov. Perry, would only reduce the purchasing power of Americans.

Now, I like Gov. Perry. I agree with him on almost every social issue [Note:This is a cute comment from Stein, since where Stein and Perry really agree is on waging a vast number of wars overseas. -RW]. But may I respectfully offer him a lesson in economics?....

One of the measures the Fed is using is to increase the money supply or what Gov. Perry would call "printing money."

Typically this is a helpful move, although not lately. It's not a radical move. It's not anywhere near a "treasonous" move.

It is not at all clear that in an economy as weak as ours that creating more money would cause inflation.

The idea is to make money cheaper so businesses will borrow and then invest.

Frankly, once again, it has not worked so far. But it is an orthodox, classic move.

It is a move by a man, Ben Bernanke, who wants to help his country recover. To call Dr Bernanke - a patriot doing his best for his country - "treasonous" is a serious mistake

Got that? Stein thinks Fed money printing will not cause price inflation because the economy is too weak? This is classic Keynesian interventionist babbling. But, even Paul Krugman, a top lieutenant on the Keynesian interventionist team, has admitted that price inflation is already climbing at a faster pace than he expected:

OK, someone is going to point out that inflation has run somewhat higher than I predicted; yes, it has.

And this is what has Krugman spooked, accelerating price inflation at the producer level. The Producer Price Index is soaring:

Jan 3.6

Feb 5.4

Mar 5.6

Apr 6.8

May 7.3

Jun 7.0

Jul 7.2

Bottom line: Stein, aside from working with wacky Keynesian theory, doesn't even have the current facts on his side. My advice is to do what Ferris Bueller did, when Stein is teaching economics, take the day off: