Thursday, February 23, 2012

An Econometrician's Solution to Higher Oil Prices: Print More Money

I am not making this up.

Here's Karl Smith's advice to the Fed if oil prices keep climbing:
My advice would be to go with something like this [issue a statement saying]
Higher oil prices represent headwinds for the US economy and may justify more accommodative action to prevent job growth from slowing
omehow, according tp Smith that newly printed Fed money isn't bidding up oil prices (and everything else). The money supply (M2) really isn't growing by 10%.  The oil producers are putting it into Treasury Bills, where apparently according to Smith it doesn't impact the economy.


  1. Replies
    1. When your only tool is a fiat money hammer, not only does every problem look like a nail, you also hammer it with a trillion hammers.

  2. I love it...This is why I refuse to pursue a phd in econ. I'd have to fight this mentality the entire way through.

    1. Agreed, it's why I moved away from an undergrad in business towards engineering too.

      Avoid stupid people, learn real science and actually have skills that allow contribution to society rather than destruction of it, it's worth win-win-win, to paraphrase Charlie Sheen I'm 'tri-winning'.

  3. Sounds good to me...if oil prices go down, print, if oil prices go up, print more.

    Who here wants silver and gold prices to go down? not f*****g me.

  4. I always hear Economists of the Austrian persuasion say that the government's only solution to everything is to print money. I used to think that they also had another trick up their sleeves... wait for it...... to contract the money supply. But apparently I was wrong and you/the other Austrians were right. Printing money does indeed seem to be their only trick. It reminds me of the movie Zoolander where the main character, a dumb male model, only knew how to turn right but not left. Sounds like the powers that be and Karl Zoolander.. uh ..i mean Smith.