Letting intention substitute for the act, I have been meaning to blog on the following:
1. The really hilarious conspiracy theories on DU, etc., that George Bush is responsible for falling gas prices. If I remember correctly, when prices were heading up, John Kerry thundered that George Bush should go to his friends in the oil bidness and talk them into dropping the price of gasoline.
2. The line between torture and good interrogation tactics. How much does it have to do with the end being pursued? Torture in order to extract a confession for use in court is bad. Coercion to get actionable military information is good.
3. And while we're at it, what to make of the argument that torture never results in good information. Is there any example in which that's the way the world works? What are they saying about all the various governments who have used torture, broadly defined? That they are just sadists, completely uninterested in the truth? My impression was that the meme from World War II to 9/11 was that everyone breaks eventually, so whenever an operative was captured you had to assume that everything they knew would soon be known to the enemy. When people say that the prisoner will say anything to stop the torture, that's true as far as it goes. But it can only work as a result of bad technique on the part of the interrogators. You need to start with broad questions that don't communicate much information to the prisoner and you need to ask at least some questions to which you know the answer.
4. Finally, a lovely piece in USA Today a few days ago arguing that lower gas prices might stoke inflation. Of course, higher gas prices are also said to stoke inflation. The sheer ignorance of almost everyone about what inflation is (a general increase in prices caused by an increase in the money supply relative to real value) is astonishing. As Milton Friedman said, inflation is always and everywhere a monetary phenomenon. It cannot be caused by an increase or decrease in commodity prices. (Which is not to say that changes in oil prices don't show up in the prices for a lot of other products that incorporate petroleum one way or another. They do. But that's not inflation (by definition). That's the price mechanism at work, signaling that we ought to shift away from, or to, the effected products.)
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3 comments:
1. Yeah, it's amazing how Bush was able to prevent any major hurricanes this year.
4. Well, I suppose that if falling oil prices cause the Fed to start easing interest rates and the Fed then falls asleep at the wheel, we could end up with higher inflation. I personally think inflation should be higher anyway.
David wrote: "...inflation ... cannot be caused by an increase ... in commodity prices."
Yes and no. Consider the following: let's say the price of crude doubles. This would greatly increase the expected ROIs for projects related to producing energy. This would translate to more takers of secure loans from the banking system at the going rate for secure loans. But the going rate for secure loans is simply the fed funds rate plus a bit for the banks to make profits. As long as the banks can find takers for the loans, they'll borrow money from the fed to cover reserve requirements. So, in this scenario (rising crude or other commodity prices), if the Fed left interest rates unchanged, it would cause money to be sucked into the economy which would lead to inflationary pressure.
I would say that the rising crude prices "caused" inflation. An alternative view would be that the Fed falling asleep at the wheel caused inflation.
Bret:
Between you and David, I am looking forward to learning a whole lot more about monetary policy.
Speaking as someone who took far more than the student semester requirement for economics, and has kept a hand in ever since.
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