Saturday, March 10, 2012

Obvious to whom?

 Indeed I am confused as to how he could deny the liquidity effect; it seems obvious that central banks can raise or cut short term rates when they want to.  Scott Sumner From a Delong Post

If the Fed raised rates to 4% today, Congress would go bankrupt and Ben would be out of a job. Why? Congressional programs are rigid, and the Fed works for Congress Scott is under the assumption that our adoption of the dollar is a natural consequence of something. What he fails to recognize is the large inefficient army of expensive armed agents that enforce dollar usage. The more money you print the greater the number of armed agents you need.

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