Login/Sign up

World Association of International Studies

PAX, LUX ET VERITAS SINCE 1965
Post Money, Stuff Key to Economic Recovery: Bernankie
Created by John Eipper on 04/01/12 8:56 AM

Previous posts in this discussion:

Post

Money, Stuff Key to Economic Recovery: Bernankie (John Eipper, USA, 04/01/12 8:56 am)

2012 Q1 leading indicators have trended positive, giving hope that we have seen the beginning of the end (or at least the end of the beginning) of the current Great Recession, which began when Wall Street investment banks, in the fall of 2008, made bad choices and bit off more than they could chew.  People in some parts of the world are actually finding work, housing prices are rebounding to 1985 levels, and the plucky (and lower-case) eurozone, only partially daunted by insolvency, continues to issue its overvalued and uninspired banknotes.

But is this recovery, characterized as "wimpy" in a Time magazine cover story (2 April 2012), sustainable?

Speaking in the United States on the morning of 1 April, Central Bank Chairman Zen B. Bernankie expressed a guarded optimism, but warned that money and stuff are still not in adequate supply.

"We are reservedly giddy that the economy is getting on track, but recovery is predicated on everyone having money and stuff.  Therefore, a two-pronged strategy for meaningful economic stimulus must be embraced:  money has to be more accessible, but people are not satisfied with money only:  they also demand stuff.

"Being a bank, the Central Bank has heretofore focused most of its energy on monetary policy--M1 and interest rates and so on--but has too often underestimated the importance of stuff and its availability (S1).  Increasing wealth and money supply, such as with the several rounds of Quantitative Easing, achieves nothing if a corresponding maximization of stuff is not also realized.  To cite but one trenchant example, gasoline has nearly returned to its historic price levels of pre-Recession 2008; this leads us to conclude that not enough of this stuff is available.  Why, therefore, not issue pre-paid gasoline cards to all Americans, perhaps in the envelope where we mail the tax refunds, as well as in schools and public libraries?  Post offices may not be the most efficient infrastructure for this initiative, as they are closing them all over the place.

"Copious attention has been devoted to the so-called mortgage crisis.  We believe this concern is misdirected, a straw man set up by those who fail to grasp the money-stuff equilibrium.  Housing is a specific category of stuff that people need and use, and indices suggest it is in adequate supply.  What homeowners need is not a complex government-run program of re-financing and principal forgiveness; what they need is sufficient money to pay off their homes--their stuff.  A corollary benefit of providing people this money will be to return deflated housing prices to their former healthy levels.  It's a matter of basic macroeconomics.

"Analogous to housing, unemployment rates are bandied about by doomsdayers as a sign of our economic malaise.  The present figure of 8.3% of Americans out of work is slightly lower than it was a year or two ago, but even full employment will not guarantee that everyone has enough money.  Or stuff.  Politicians are disingenuous when they intone the 'jobs, jobs, jobs' mantra; it's a red herring designed to distract voters from their true problem.  Americans--and why should we limit ourselves to the domestic situation only?  It's a global economy, folks--don't care about or particularly want jobs; what they clamor for is stuff.  'Jobs-killing legislation'--what a tired cliché!--therefore does not negatively impact the economy unless it leads to a choking of M1 or S1."

Benankie paused and wiped off his glistening head.  He then proceeded to give an overview of the historical relationship between money and stuff, while citing a number of economic historians--Smith, Jones, Ricardo, Lennon, Salma Hayek, Trumpeter, some guy named Milton, and "Privatization Pete," a blogger who thinks it would be a good idea to take all public goods (Postal Service, Interstate Highways, national parks, our armed forces, the Internet and God) and hand them over to a few individuals who could then extract maximum amounts of money from people who want to use this crucial stuff.  Bernankie cautioned against such a radical solution, and stressed that social unrest can be obviated, now and long-term, by ensuring adequate money and stuff for all.  This will become the number one priority of the Central Bank going forward. 

The Chairman concluded his remarks with a PowerPoint presentation, which proved his point via three pictures he found on the computer:

Tlatelolco, 1518:  the stuff-for-money exchange.  Note the abundance of stuff


Turning money into stuff:  Supermarket culture c. 1950

 

 

They have money but no stuff:  Beijing "Apple Riots," 2012

 

JE (who likes his money almost as much as he likes his stuff) comments:  No argument with Bernankie here-- +1 as we might say in modern parlance.  (By "+1" I mean that I agree with Bernankie.)  Just one followup question/concern:  how will the universal availability of money and stuff impact my retirement portfolio?  Perhaps our long-silent WAIS colleague on the Bolivian Riviera, Ima Weisser, could comment.


SHARE:
Rate this post
Informational value 
Insight 
Fairness 
Reader Ratings (2)
87%
Informational value100%
Insight100%
Fairness60%

Visits: 95

Comments/Replies

Please login/register to reply or comment: Login/Sign up

Trending Now



All Forums with Published Content (41975 posts)

- Unassigned

Culture & Language

American Indians Art Awards Bestiary of Insults Books Conspiracy Theories Culture Ethics Film Food Futurology Gender Issues Humor Intellectuals Jews Language Literature Media Coverage Movies Music Newspapers Numismatics Philosophy Plagiarism Prisons Racial Issues Sports Tattoos Western Civilization World Communications

Economics

Capitalism Economics International Finance World Bank World Economy

Education

Education Hoover Institution Journal Publications Libraries Universities World Bibliography Series

History

Biographies Conspiracies Crime Decline of West German Holocaust Historical Figures History Holocausts Individuals Japanese Holocaust Leaders Learning Biographies Learning History Russian Holocaust Turkish Holocaust

Nations

Afghanistan Africa Albania Algeria Argentina Asia Australia Austria Bangladesh Belgium Belize Bolivia Brazil Canada Central America Chechnya Chile China Colombia Costa Rica Croatia Cuba Cyprus Czech Republic Denmark East Europe East Timor Ecuador Egypt El Salvador England Estonia Ethiopia Europe European Union Finland France French Guiana Germany Greece Guatemala Haiti Hungary Iceland India Indonesia Iran (Persia) Iraq Ireland Israel/Palestine Italy Japan Jordan Kenya Korea Kosovo Kuwait Kyrgyzstan Latin America Liberia Libya Mali Mexico Middle East Mongolia Morocco Namibia Nations Compared Netherlands New Zealand Nicaragua Niger Nigeria North America Norway Pacific Islands Pakistan Palestine Paraguay Peru Philippines Poland Polombia Portugal Romania Saudi Arabia Scandinavia Scotland Serbia Singapore Slovakia South Africa South America Southeast Asia Spain Sudan Sweden Switzerland Syria Thailand The Pacific Tunisia Turkey Turkmenistan UK (United Kingdom) Ukraine USA (America) USSR/Russia Uzbekistan Venezuela Vietnam West Europe Yemen Yugoslavia Zaire

Politics

Balkanization Communism Constitutions Democracy Dictators Diplomacy Floism Global Issues Hegemony Homeland Security Human Rights Immigration International Events Law Nationalism NATO Organizations Peace Politics Terrorism United Nations US Elections 2008 US Elections 2012 US Elections 2016 Violence War War Crimes Within the US

Religion

Christianity Hinduism Islam Judaism Liberation Theology Religion

Science & Technology

Alcohol Anthropology Automotives Biological Weapons Design and Architecture Drugs Energy Environment Internet Landmines Mathematics Medicine Natural Disasters Psychology Recycling Research Science and Humanities Sexuality Space Technology World Wide Web (Internet)

Travel

Geography Maps Tourism Transportation

WAIS

1-TRIBUTES TO PROFESSOR HILTON 2001 Conference on Globalizations Academic WAR Forums Ask WAIS Experts Benefactors Chairman General News Member Information Member Nomination PAIS Research News Ronald Hilton Quotes Seasonal Messages Tributes to Prof. Hilton Varia Various Topics WAIS WAIS 2006 Conference WAIS Board Members WAIS History WAIS Interviews WAIS NEWS waisworld.org launch WAR Forums on Media & Research Who's Who