Scott Sumner writes:
Yesterday I read dozens of comments from pundits all over the world on the SNB’s surprise abandonment of the currency peg. Every single one thought it was a stupid move. The markets thought it was a stupid move. I thought it was a stupid move....
The explanation for the SNB move is quite simple—stupidity. It’s stupid to throw away 3 1/3 years of credibility.What is the logic behind the thinking of this latest Koch brothers' find? He doesn't really say, but it appears he is in favor of money printing:
Peg your currency to NGDP futures prices. And if you are not going to do that, then for God’s sake level target SOMETHING.His view, in other words, is in favor of money printing, as though that somehow will create wealth. I continue to believe that such money printing advocates fail to understand the basics of supply and demand economics and that markets clear.
Sumner to me looks pretty much like Krugman without a beard, Here's how Krugie presented the same position as Sumner:
First, having in effect thrown away its credibility – in today’s world, the crucial credibility central banks need involves, not willingness to take away the punch bowl, but willingness to keep pushing liquor on an abstemious crowd – it’s hard to see how the SNB can get it back.
The notion that pieces of paper with ink on them can represent real value and act as money is absurd. I'm sure guys like Sumner and Krugman would admit to it in private, but their lifestyles depend on them conning the public with laughable tales about aggregate demand and liquidity traps.
ReplyDeleteWhen creating fiat in limitless amounts is viewed as the panacea for our economic ills, I have to admit that the American people are either too stupid, ignorant, or apathetic to object to such an obvious fallacy.
All you can do as individuals is to recognize what is self-evident, position yourself to avoid the worst of the calamity that awaits the world, and prepare yourself for surviving the looming crisis.
The volatility we're seeing with equities, cratering oil prices, plummeting bond yields, and rising gold/silver prices suggest that 2015 will be a tumultuous time for us all. No thanks to the likes of Krugman and Sumner.
Surely, if not for having literally all the money in the world to buy loyalty and good press, all central banks would be much farther along in losing credibility. What theses dubious economists truly desire is predictability and the moral hazard that accompanies it.
ReplyDeleteThis was a VERY odd move to me....reminds me of when they took down DSK.
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