Wednesday, April 02, 2008
Hidden price controls, part II
All economists, and most politicians, understand the ill effects of price and wage controls. No economist would recommend controlling the price of bread or gasoline; it's been obvious since 300 AD that price controls cause shortages of some products, overproduction of other products, hoarding, loss of jobs, and general distortion of supply and demand.
So why do nearly all economists, and all politicians, go along with Greenspan and Bernanke when they control the price of money? Why do economists calmly discuss whether it's better to cut the prime rate by 100 basis points or to cut the prime rate by 200 basis points?
The ill effects are classic: shortage of savings, overproduction of houses, loss of jobs .... All are exactly what you'd expect from an artificial ceiling on the price of money. And yet the economists and politicians are still hungering for an even lower ceiling.
One more profession totally corrupted by greed and fraud.
So why do nearly all economists, and all politicians, go along with Greenspan and Bernanke when they control the price of money? Why do economists calmly discuss whether it's better to cut the prime rate by 100 basis points or to cut the prime rate by 200 basis points?
The ill effects are classic: shortage of savings, overproduction of houses, loss of jobs .... All are exactly what you'd expect from an artificial ceiling on the price of money. And yet the economists and politicians are still hungering for an even lower ceiling.
One more profession totally corrupted by greed and fraud.
Labels: the broken circle
¶ 3:05 PM
