On July 11, The Center for Vision & Values posted my article decrying the insulting name-calling directed toward Federal Reserve Board Chairman Ben Bernanke. The very next day, Bernanke made me question my forbearance by telling Congress that a third round of “quantitative easing,” or “QE3,” could be a near-term option.
Now it’s my turn to call Bernanke a name, but I’ll use a clinical label, not a crude one. He is an inflationist, although he may prefer the label “anti-deflationist.” He so fears a deflationary spiral that he will create however many dollars he believes necessary to avert deflation.
Bernanke’s repeated attempts to patch over the nation’s economic weakness, rottenness, and dead wood with newly created dollars remind me of the “Potemkin village” ruse. The Soviet communists duped foreign visitors into thinking that communism was a viable and prosperous system by steering them to sham factories, stores, villages, etc., which appeared to be productive, bustling, and attractive. In reality, Potemkin villages were like movie sets, built to disguise the widespread poverty and backwardness that characterized life in the “workers’ paradise.”
Official statistics insist that the Great Recession ended two years ago. Yet unemployment is creeping up, record numbers of workers are remaining unemployed for record lengths of time, income is down for small proprietors, and millions of people feel as though the recession never ended.
It is proverbial that statistics lie. One such statistic is the gross domestic product. GDP has risen modestly the last two years, supposedly indicating growth rather than recession. Here is the flaw in GDP: By definition, GDP=C+I+G. In other words, GDP equals the sum of consumer spending, private investment, and government spending. (There is also a problematical addendum of net exports, reflecting the mystical mercantilist notion that a country is richer if foreigners obtain more goods and services than domestic residents do, but let’s omit that here.)
Read More at Floyd Reports By Mark W. Hendrickson, Floyd Reports