He was referring to Harvard economist Greg Mankiw. He went on to say how Mr. Mankiw would go above and beyond the unconventional methods of current Fed chair Ben Bernanke. He went so far as saying Mankiw has advocated policies that would "make Bernanke blush." The thing is, they may also make Bernanke laugh.... Hard.
He sited an op-ed Mankiw did last year where he said the Fed should make their 2 percent inflation target a "level" target. That's saying if inflation fell below 2% one year The Fed would promote inflation of over 2% the year after. They would do this with more asset buying or other unusual policies.
This sounds neat and tidy in theory but in practice it's near impossible and dangerous. It leaves the other side of the coin out of the discussion. What if inflation came in over the "more than 2%" target in the year after? What then? The only way to get inflation under control is to tighten monetary policy which leads us back to where we are now. And that's if we're lucky. We could over shoot to the downside causing the Fed to have to aggressively ease raising the possibility that we'll over shoot to the upside again.
It's like when your driving and you swerve one way and to get back in the lane you were in you swerve back but a little too hard then you have to swerve again and your all over the place.
Inflation targeting isn't the easiest thing to do because the consequences are so huge. This is why Bernanke would rather do too little than do too much. It wouldn't hurt right away, but 15 years from now we would be wishing and hoping for these days when all we have to worry about is job growth.
Another thing Weisenthal points out (and here's where Bernanke would laugh) as a "tongue and cheek" proposal of Mankiw's, well, really not of Mankiw's if you read Mankiw's 2009 op-ed Weisenthal got the quote from he says it came from one of his graduate students at a seminar. It goes like this, the Fed would pick a number from zero to 9 and announce that the following year any bills containing said number would no longer be legal tender. This he says would put a 10% negative interest rate on money.
It would also make Ron Paul lose his fucking MIND! Not just because of the negative 10% interest rate but the recklessness in which the Fed handles the nations currency, and the negative 10% interest rate.
This is what's coming out of the mouths and brains of Harvard graduate students? In the article Mankiw calls this a "clever scheme", I shit you not.
This is clever? No, this is stupid. What about the countries around the world who hold the US Dollar as reserves? What are they going to do? Maybe swap their money for the good dollars? And even more puzzling, why would taking 10% of the money supply out of circulation spur spending? That's monetary tightening right there my man. And I'm assuming the Fed wouldn't tell the public what the number was as no one would spend any other bills but those if they could, it would lead to hoarding as the purchasing power of the dollars left would rise with less dollars in the economy.
I'm no Harvard economist and I've never played one on television so I could be missing something but that sounds idiotic to me. But he did say it "tongue & cheekily" right? Still, It's amazing he said or wrote it at all.
Mr. Weisenthals wants Romney to win because he thinks he'll be able to get Republicans in congress to act on growth policies because austerity is an "out-of-power concept" and I agree. Also the unconventional monetary measures might be politically doable if Romney get's in, I get that. But the risks of fucking the economy up goes up in that same instance. If him and his advisers and his congressional allies can do pretty much what they want added with the pressure to get results it could lead to some otherwise ill advised policies.
But even on a more basic level I don't think Romney can save the economy because he nor his advisers are likely to be honest with themselves or the American people about what's actually wrong with the economy. That's assuming he even knows what it is. I wrote about politics and religion recently and I added the IMC or the industrial military complex because it wields the biggest influence on our government. I mention that because the economy's problem is that we allocate funds super poorly. Instead of wars we should be rebuilding our infrastructure. Romney getting on the school voucher bandwagon was a giant step in the right direction but we need a thousand more and each one even bigger than that giant first step.
When it comes to spurring growth we're doing things that produce the exact opposite results and looking for ways to do more. Many said it was uncertainty about Obamacare that kept businesses from spending but that was a smoke screen. It really was uncertainty about the economy in general. If I make money I'll spend some, but if I'm not sure if I'll be able to make more I'll spend sparingly. Add to that if I'm worried that my government may collapse under the weight of it's deficit or need to raise taxes crazily I'll spend what I have sparingly. That's exactly what has happened here. People are not sure if the U.S. has jumped the shark or not yet (but many say we have.)
What made this country great though was the fact that power was somewhat balanced. If spending got crazy we had real conservatives to reign that in, no matter what the spending was on. Now we have politically correct conservatives who don't say a word about the out of control spending on the wars. President Obama was at every campaign stop screamed at the top of his lungs about "the two wars we can't afford" the first time around. Now you don't hear a peep. We only have one war left but still, not a peep. The American people see this. Despite what the world thinks we're not dumb. And despite all the attempts to dumb down the electorate we... are.... not.. dumb!
I hear people like Jack Welch criticizing President Obama for lack of leadership but Romney offers even less than Pres. Obama. Romney, like pres. Obama won't touch the really tough issues, like the huge swaths of our society that are largely unproductive. But pres. Obama tried at least, and even got something done on healthcare (not the right approach for healthcare I think, but that's another post.) Romney on the other hand would do much to make the country's problems worse. Namely cutting taxes. Nobody likes paying taxes but when the European crisis is over it's our turn. We need a president that will stand up to his own party and do what's right for America. Not just what's right for his donors. And we can't wait for the crisis, we need to be proactive.
I'm not mad at Weisenthal for writing this article, he's just a writer and a good one at that. I'm mad at the elite in this country who instead of preserving and bettering the country for the next generation seem content to get all they can and enjoy it while they can and to hell with the next generation.
Everywhere in nature you see a hierarchy, it's natural for there to be an elite but that elite should be the sharpest things moving. They should have no problem from the masses because the masses should easily see the benefits of having an elite so sharp. There should be so much right that they wouldn't be concerned so much with what's wrong having certitude that things do always get better. No, I'm not mad at Joe, I'm mad at the well known Harvard economist Mr. Mankiw for being one of the elite, but not acting like one.