Wednesday, February 9, 2011

Bernanke versus Paul

At the House Budget hearing, Fed Chairman Ben Bernanke just cited a study that says the Fed's QE2 created 700,000 jobs.

At Ron Paul's Monetary Policy subcommittee hearing, witnesses Thomas DiLorenzo and Richard Vetter testified that the Fed can't create jobs in the long term.

In fact, I would argue that not only does the Fed create unemployment in the long term, but in the short term, it does not create employment, either, it simply transfers workers to the Fed-induced boom sectors. In the most recent boom before the crisis, it resulted in workers, for example, heading into the housing construction sector. 

1 comment:

  1. Yes, but transferring workers from where? If the people who transferred to housing during the last boom were unemployed before-hand, I would definitely count that as 'creating employment'--though obviously only short-term.