Doug French

A year ago George Melloan wrote in the Wall Street Journal, "We're all Keynesian's Again." You remember last January — change was on its way. We had a new rock-star president and he was going to get us out of the mess that Wall Street had got us into. "Now is the time to jump-start job creation, restart lending, and invest in areas like energy, health care, and education that will grow our economy, even as we make hard choices to bring our deficit down," President Obama told Congress. The new president has a worldview that is "all but in name Keynesian," Carl Horowitz wrote last spring.

This article orginally appeared at Mises.org on January 25, 2010. We print it here to memorialize QE4-ever.  

Meanwhile the guy running the Federal Reserve is an expert on the Great Depression. Ben Bernanke wasn't going to make the same mistakes the policy makers made during the 1930s. After all, he pointed out back in 2002 when he was just a Fed governor,

the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.

And the new guy at the Treasury, well he used to run the New York Fed; he worked for Kissinger Associates, the Council on Foreign Relations, and the International Monetary Fund — so Washington figured he knew how to fix the economy. The Treasury secretary is so in touch with the market that he and his wife tried to sell their $1.6 million home in 2009 for more than they paid for it in 2004. They have been unsuccessful and forced to rent the place out.


Doug French

Doug French is is president of the Mises Institute and author of Early Speculative Bubbles & Increases in the Money Supply and Walk Away: The Rise and Fall of the Home-Ownership Myth

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