Tuesday, December 7, 2010

Bob Murphy Interviewed by Judge Napolitano

Great stuff. The Judge asks important questions and Murphy has answers by telling it like it is.


  1. I don't disagree with anything Mr. Murphy is saying, but I took Bernanke to be saying that QE2 is not significantly going to increase the monetary base:

    For example, out of all the junk the Fed bought at the beginning of the crisis, maybe some of it is maturing and the Fed is actually being paid for it. This then lowers the monetary base, so then the Fed turns around and buys Treasury bonds ...

    I guess. Don't know. Am I off?

  2. The Fed has a program to re-invest: cash flow from its maturing MBS cashflow. This is actually increasing the money supply.

    Further, QE2 at $600 billion is an increase in the monetary base of 30% that is far from insignificant. It is hugely irresponsible money printing.

  3. If 600BN increases the base by 30%, what %age did QE1 increase the base? Wasn't that a $2T increase?

  4. The base was increased to $2 trillion, but most of that went into excess reserves. This time that's not going to happen

  5. Thanks for the clarification; I understand now. It's just as you say :

    For the life of me then, I can't make heads or tails of Bernanke's statement.