The Monkey Cage

I think some economist think:
1. A bit of inflation may be better than no inflation, because of the costs to get no inflation in some contexts.
2. Inflation can be a mean to redistribute income from creditors to Debtors. If someone wants to do this redistribution, than inflation can be good in the short term.
3. I think no economist will say that inflation is good in the long run.

I think this is pretty good evidence of just what Mankiw thinks is horrible. It’s quite telling.

He was almost making good sense until the last line: “…we need a system of global regulation and governance…”

Ha! America can’t even manage its own little Keynesian fraud of a monetary system. Now a global system is advocated?? Dystopia, indeed.

What Americans should really be questioning now, is why the government doesn’t simply print all the money directly, instead of using the fractional reserve Ponzi scheme.

Let’s see:

1). With a keystroke, the Fed drops $100 of electronic fiat money into bank #1’s account;

2). Based on 10% reserve requirement, bank #1 loans $90 to a home buyer, thereby depositing it in his account at bank #2; bank #1 collects multi-decade interest stream on $90 principle from home buyer;

3). In turn, again based on 10% reserve requirement, bank #2 loans out $81 to another home buyer, thereby depositing it in his account at bank #3; bank #2 collects multi-decade interest stream on $81 principle;

The cycle continues until roughly $1,000 of credit is created, all by commercial banks, from the initial $100 deposit by the Fed. Those banks are collecting interest on money that they never had in the first place! Yet it’s listed on their accounts a receivables!! Remember, only $100 of “real” money was initially created by the Fed…and that’s all that’s owed to the Fed by bank #1. Plus some interest, I suppose.

What should really be egregious to Americans is that if a homeowner defaults, the bank gets to repossess his house! A free house for the bank!

So, instead of all this nonsense about “global regulation”—after all, who’s going to regulate everything, another one of your oligarchs?—and “tax increases”, why don’t you American geniuses let the U.S. government print ALL of your money and loan it out via the banks?

You could probably eliminate the income tax that way. After all, it was incepted the same year as your fraudulent Federal Reserve, in 1913.

Better yet, let the individual states print the money as gold-backed certificates. I think there’s a bill pending in your House of Reps. Check it out—and stop being taken for a ride!

Eric: I doubt Mankiw thinks this would be a “dystopia.” My guess is that he’s poking fun either at Rogoff or at the economics profession more generally.