To quote WaPo directly, to ensure there is no confusion:
Whatever good [the financial regulation bill] might do would be canceled out by the inclusion of Texas Republican Ron Paul’s proposal to subject the Federal Reserve’s monetary policymaking to regular audits by the Government Accountability Office, an arm of Congress.
Supporters suggest that the measure would merely provide “transparency” for a secretive, powerful institution. But for all its wide, bipartisan backing, this is anything but a prudent or centrist law. In fact, it is an attack — born of crisis and the attendant emotions — on the political independence the central bank must have to do its job.
The case for political independence at the Fed is elementary. Elected officials, such as members of Congress, are inherently loath to tighten the supply of money available to their constituents, even when that might be necessary to fight inflation. U.S. experience, and that of countries around the world, confirms this, which is why Congress exempted the Fed’s money-supply decisions from GAO scrutiny in a 1978 law. Mr. Paul’s proposal would effectively repeal that. Investors already spend enough energy and money trying to figure out where interest rates are heading without this additional dose of permanent uncertainty. Trust in the Fed, and, by extension, the dollar, will evaporate if markets believe that the Fed is courting the approval of Congress’s auditors.
Mr. Paul doesn’t care; he’s an “end the Fed” man. In the past, other members of Congress have basically just humored him. It’s a sign of the times — and not a good one — that they have been Fed-bashed into following him now.
The case for political independence at [insert any important government dept here] is elementary. Elected officials, such as members of Congress, are inherently loath to [do the right thing long-term], even when that might be necessary to [do so for the long-term interests of the country]. U.S. experience, and that of countries around the world, confirms this, which is why [we advocate fascism in America].
Do you see how this argument can apply to any important government policy?
If the same argument can apply to any government policy, why have democracy at all?
It must be because WaPo supports fascism in America.
I’m worried if the govt gets frustrated because the people aren’t happy enough it will do a ”Jim Jones” and try to give us free Kool-Aid.
Hopefully we’ll all act happier and it won’t have to come to that. At least not in my lifetime.
You know you’re living in an Orwell novel when:
1. The only politician who makes sense (Barnaby Joyce in Oz and Ron Paul in the US) is treated as a lunatic, and the lunatics (“robot” Julia Gillard in Oz and “Master Freemason” George Bush in the US) are treated with respect.
2. Joyce is castigated for telling the truth about sovereign debt.
3. Joyce is told it’s “irresponsible” to suggest that some States could not pay back their debts. Surely it’s “irresponsible” to have racked up enough debt for this to become a controversial issue in the first place!
4. The ETS is treated as serious policy and REAL environmental catastrophes such as dry land salinity, oil spills of the WA coast, the corrupt mining industry raping fertile farmland for a cheap buck, and topsoil erosion are all studiously ignored by the media.
5. Insane US and UK debt levels are treated as “normal”.
6. Krugman argues (successfully) that more deficit spending is the only “responsible” way for the US govt to get out of a financial crisis brought on by too much debt.
7. Not one mainstream media outlet seriously questions the billions in misallocated stimulus spending.
8. Counterfeit banking is respected, lauded and made legal.
9. Fake health scares such as SARS, and Swine Flu require compulsory vaccinations of the populace.
10. Good people are murdered, their lives or careers destroyed for speaking out and telling the truth.
I see catastrophe ahead. It’s just a matter of time before you do, too.
I’ve finally gotten around to dragging out some discussion material on the hoary old deflation/inflation debate from the Ozrisk.net website here, where I explained my position. It will (mainly) be deflation, oscillating violently between the two. Here is the detailed discussion:
Most people just support their own little position (Rothbardians scream that govt everywhere is evil and must be killed. Some may have supported the repeal of Glass Steagall, as signalling a reduction in govt regulation. Idiots if they did). The real evil is central bank supported FRB. That’s what kills an economy through cancerous malinvestment. Socialism is preferable to fascism, if that’s the choice we have to make.
Similarly, there’s a debate between Keen/Mish debt-deflationists and Gary North/Jim Sinclair hyperinflationists. In a sense they are both right. There is and will continue to be both deflation and inflation – JUST IN DIFFERENT SECTORS OF THE ECONOMY. [I use the terms in the "modern" terminology (not in the old Austrian way - meaning an increase/decrease in the total money supply).]
Let me explain my position because I think this is interesting.
Near hyperinflation DID (already!) occur. For a decade. In HOUSE PRICES. Because housing prices were grossly underweighted in the CPI (housing is essentially a consumption good) this didn’t show up in conventional measures. But I agree with Keen/Mish – credit is money and debt issuance results in “money” (purchasing power) being created when some sucker goes into debt and buys whatever is on offer. What was on offer for the last decade was housing. It had the features of a classic bubble/Ponzi scheme with people looking at returns rather than yield. And because the asset was security for a loan, this could go on for many years longer than consumer credit/debt bubbles, which generally peter out because the issuance of debt “leaks” into consumption goods and doesn’t go back into an asset so doesn’t generate the recursive cycles that asset bubbles generate.
The “winners” in this game (like always) were the recipients of the debt money – property developers like Triguboff who rezoned land from industrial to residential and sold units en masse to the sucker public. They got debt and a 30 year mortgage. He got the debt money into his account. Magic! Where did the hyperinflationary money go? Into the pockets of the FIRST RECIPIENTS of the debt money – mainly residential property developers.
Now that the bubble has burst, the Japan deflation scenario is kicking in, because the main source of fresh debt money into the economy is fresh suckers going into debt to buy housing. The property market is double the value of the stockmarket.
But now that Ponzi scheme is over the Triguboffs are looking for a safe place to stash their cash. They don’t want their bank to blow or the exchange rate to collapse. So they take the money out of circulation (don’t keep developing units) and stash it overseas in gold or buy land and sit on it. Money velocity slows as the beneficiaries of the Ponzi scheme collect their winnings, take the chips off the table and stop paying their contractors and leave for Europe.
OK, that signals DEFLATION. Big DEFLATION. Keen/Mish are right – we’re turning Japanese.
But, hold on, what about North and the Austrians? Base money has exploded. It’s sitting at the banks. The problem is the banks can’t find a credit worthy borrower to “give” the new money to. If they could another bubble would quickly form. Bernanke is also keeping the powder dry by paying interest on the money held with the Fed. Why would a bank lend in this economy (at risk) when he has a risk-free client willing to pay interest income on the money just created? It’s like a mouse trap pulled back, waiting to snap. All that money just sitting there – like a dam waiting to burst into the next asset bubble.
When either (1) interest stops being paid or (2) the banks find a new bubble, then things will get interesting. What is the new bubble? It’s ALREADY HERE!
The new bubble is govt debt. Private clients have proven unexpectedly risky. Businesses and household default rates have spiked. Stuff them. Lend only to the Fed or the central govt (not even States or councils can get comparable rates to the biggies). “At least we’ll get paid back,” say the big gun-shy banks.
So ultimately this new govt debt money is going to govt employees (mainly) and on govt payouts. The size of govt is actually increasing in this recession. Incredible. For the first time a govt employee is paid more in the US that the average private worker.
So there is an “inflationary” bubble RIGHT NOW – in govt employment. These idiots sit around writing reports, writing regulations, filling in non-existent potholes. They exist simply to spend the money back into the economy. They are like zombie-consumers, doing nothing that is actually “needed” by the real economy but existing solely off coercive taxes/debt issuance from the govt. If the govt couldn’t counterfeit the money the whole apparatus of excessive govt employment would collapse and these guys would have to find real jobs.
But what happens when you have a bubble in govt employment? You have skills sucked out of the private economy. What skills are required most (that would be evident if the money supply was stable and govt couldn’t sell bonds to the Fed)? Sustainable technologies, agriculture, farming, etc. Govt sucks the factors of production away from where they are needed to where the money is – WITH PARASITIC GOVTS.
If this continues, who will actually do physical labour? Who will plant the food we rely on to survive? SUCKERS. Stupid people who don’t understand the game. But stupid people are the least qualified to produce sustainable agriculture!
So like the budding nuclear scientist being “sucked” into parasitic banking by the screwed by pricing structure from central bank supported FRB, now budding farmers/labourers are being sucked into the police-force, the local and State govts etc as useless pen pushers.
So it is inevitable that a destruction of our farming industries will occur, with “quantity” adjusting (ie a reduction in the quality and quantity of food) rather than price, because indebted dumb farmers can’t price adjust – they are trapped in debt (as Rowbotham has pointed out). That doesn’t mean there aren’t consequences. It just means quantity/quality adjusts, not price.
So North is wrong to see “hyperinflation” coming up soon. Hyperinflation is here in the West – in the form of zombie govt employees. Deflation for the private economy will continue. Then eventually starvation for low-income countries as oil spikes, food prices spike and availability becomes scarce.