Is this what you had in mind:
swarmusa.com
It does not strike me as overly wise at all. He strikes me as 1) a state rights advocate and 2) he has latched onto 0% inflation.
The FED has a dual mandate, 1) inflation, and 2) employment. He thinks that a single variable control is better. This I doubt. The current system is a single input, two output system. He is advocating a single input, single output system. This will likely do a better job of regulating the one variable, but it will result is wild swings of the other variable. You often post about the coming unrest caused by the current system, but this system would descend into unrest way quicker, for the simple fact that it has no interest in employment stability, yet lack of employment is the main cause of social unrest. You are focused on destruction of savings as being the main cause of social unrest. The bulk of Americans don't have savings which are anywhere near a significant fraction of their income streams. One is way more important than the other.
And he thinks that markets are magical and can set interest rates just fine. How many posts have you made on this board about market manipulation? So why are you advocating placing interest rates under the tender care of GS traders as well? This is nuts.
Most of what he writes is Utopian handwaving about the magical results he expects, not the details or any logical argument for WHY these magical results will occur. For petes sake, he advocates TWO YEARS of full tax refunds to pay down debt. Talk about the great sucking sound out of the economy!
I do find the question of inflation targets interesting and would like to read some well written articles on it. I suspect small positive inflation is important mainly for psychological reasons. It might well be the case that for a subset of the population, 0% would be better psychologically, but if so, I suspect they are a distinct minority. Some people need pay raises on a regular basis to keep them beavering away, while others are more obsessed with knowing that the stash under the mattress is not losing value. There is likely a gene or two responsible for both views. Which one it is better to address in a monetary system for overall system benefit is a good question. Like I say, I suspect that low positive inflation is.
He also makes odd arguments for both a distributed money supply system (lots of yaking about returning control to the people and states) but then he still has a centralized federal board to actually determine the quantity.
I'll read more, but it does not strike me as very well thought out. How for example does he handle the fact that rising populations intrinsically cause inflation due to competition for resources? His method for calculating the quantity of money (if I read this correctly!) is to very carefully compute inflation, then REDUCE the money supply if inflation is positive, since he is trying to regulate to 0%. So as a country gradually shifts from rural to higher urban population (growth of cities) real estate and other resources (water, farm land) all become more sought after, but per this gentleman, he will respond by choking the money supply as this happens! LOL!
Note that he can handle the population increase by itself (1'st order effect) but not the 2'nd order effect it has on competition for resources, which is expressed in asset inflation. Even if he comes up with some complex formula to adjust RE prices as they shift to higher density urban (i.e. a former farmhouse now in the city can be priced higher and still not be inflation?), how does he handle free market choices of people competing for more desirable places as they become less available? Asset inflation happens around job creation, yet he will respond by trying to kill it off??
Someone should ask him to discuss the sale of Manhattan Island for some beads to the current price of real estate there and ask how his monetary system would work over the same period of time for this example. |
