One of the 12 FOMC members believes the Fed should obey the law.

The law I am referring to is the Fed’s dual mandate.  This is from the newest Fed minutes:

almost all participants continued to anticipate that inflation over the medium-term would run at or below the 2 percent rate that the Committee judges to be most consistent with its statutory mandate. In one participant’s judgment, appropriate monetary policy would lead to inflation modestly greater than 2 percent for a time in order to bring unemployment down somewhat faster.

I presume the others believe the Fed should continue to aim for 2% inflation despite high unemployment, which would mean they are adhering to a single mandate, not a dual mandate.

But there is also good news:

Several participants commented that it would be desirable to explore the possibility of developing new tools to promote more accommodative financial conditions and thereby support a stronger economic recovery.

Perhaps they could read the old Bernanke papers on Japan.  They are full of new ideas the Fed hasn’t yet tried.


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84 Responses to “One of the 12 FOMC members believes the Fed should obey the law.”

  1. Gravatar of ChacoKevy ChacoKevy
    12. July 2012 at 09:04

    Forget 2012, Charles Evans for Fed chair 2014!

  2. Gravatar of TA TA
    12. July 2012 at 09:24

    Seven of 12 members of FOMC are the Bd of Governors. Six of the 7 are Obama appointees, as far as I can tell. The 7th, Bernanke, is Obama’s renewal as Chair.

    It seems to be fact that Obama has little understanding of monetary policy, and certainly no sympathy for a Sumnerian view of things.

  3. Gravatar of marcus nunes marcus nunes
    12. July 2012 at 09:39

    There´s clearly a need for changing the analyrical script!
    http://thefaintofheart.wordpress.com/2012/07/12/the-profession-is-in-dire-need-of-new-analytical-structures/

  4. Gravatar of Scott N Scott N
    12. July 2012 at 09:47

    The “one” you refer to is almost certainly Charles Evans. He’s been advocating something like this for a long time. He is also the Fed member who seems the most interested in NGDP targeting.

    The problem isn’t that the other members of the FOMC are adhering to a single mandate. The problem is that they don’t believe higher inflation will bring unemployment down faster. They think 2% inflation or less will bring down unemployment the fastest.

    The fact that the Fed is looking for new tools may be good news. My biggest worry is that the Fed is looking for new tools at the same time that headline PCE inflation (the Fed’s target) for April and May was 1.88% and 1.52%. If they spend too long looking around bad things could happen.

  5. Gravatar of Bill Ellis Bill Ellis
    12. July 2012 at 09:56

    But Scott, WHY ?

    Sorry, if I am a one note guy on this…I am kinda obsessed. It is like if I can figure out why the Fed wants to keep doing us wrong, I will be able to figure out a more effective counter argument than pointing out that they are doing us wrong, they know they are doing us wrong, and they know how to not do us wrong.

    I know. I am being ridiculous.

    I have heard that it is to keep oil prices low so Obama wins.
    Krugman suspects it is to keep unemployment up so Romney might win.

    Yesterday Matt Yglesias ventured in with his take….

    What you have here is the monetary policymakers deliberately adopting policies that they themselves believe would push the inflation rate below the 2 percent target. That’s not a policy that’s consistent with rapid growth in employment, and it’s why we won’t see rapid growth in employment. An elevated span of high joblessness keeps wages and commodity prices nice and low.http://www.slate.com/blogs/moneybox/2012/07/11/the_most_important_line_from_the_just_released_federal_reserve_meetings.html

    So in part, Matt is saying the Fed wants to keep wages low by keeping the labor supply high. (seems Like wages would be stickier than that until we got close to full employment ?)

    I find none of these explanations satisfying. I used to think it was ignorance that was keeping the Fed from action…I was obviously ignorant myself to think that.
    I got nothing.

    So Professor, would you like to offer a guess ?

    Anyone else ? Just for fun.

  6. Gravatar of Scott N Scott N
    12. July 2012 at 09:59

    The stock market would be a hundred or more points lower if QE3 wasn’t widely expected. Although the economic data has been really bad lately, there isn’t a lot of selling because the market believes QE3 will come soon.

    If the market gets a whiff that QE3 is not imminent … look out. Things will go down fast.

    For example, next Tuesday Bernanke is scheduled to speak before Congress. The market will rise a bit in anticipation of some hint of QE3. If the market doesn’t get what it wants, then it will drop. I don’t expect the drop to be huge because the market will probably lick its wounds and focus all its hope on the July 31 Fed meeting. However, if the market is spurned too long, it will get the message and drop like a rock.

  7. Gravatar of Scott N Scott N
    12. July 2012 at 10:04

    Bill, listen to Bernanke’s last press conference. It seems pretty clear that the FOMC believes that unconventional monetary policy tools have large costs that can only be justified if things get much worse. It’s that simple. I don’t think there is any conspiracy to help this or that presidential candidate, manipulate oil prices, etc.

  8. Gravatar of Major_Freedom Major_Freedom
    12. July 2012 at 10:20

    I presume the others believe the Fed should continue to aim for 2% inflation despite high unemployment, which would mean they are adhering to a single mandate, not a dual mandate.

    Higher price inflation does not cause more employment. You keep insinuating it does, despite the fact that the unemployment equilibrium doctrine has been both logically refuted and empirically falsified.

    Aiming for higher price inflation is not a policy of aiming at more employment. Never has been, never will be.

    It’s like stagflation during the 1970s (increasing price inflation and decreasing employment) didn’t even happen.

  9. Gravatar of William J McKibbin William J McKibbin
    12. July 2012 at 10:20

    People should keep in mind that central bankers could care less about growth and employment, which are simply independent factors that can be manipulated in order to minimize inflation — no one should doubt that central bankers resent the dual mandate of monitoring inflation and employment — the truth is that central bankers are only concerned with keeping inflation at near zero levels, even if that means the end of America — folks, that’s reality — just ask any central banker…

  10. Gravatar of Basil Basil
    12. July 2012 at 10:21

    Did you catch this lovely nugget? “Almost all members saw the unemployment rate as still elevated relative to levels that they viewed as consistent with the Committee’s mandate.” As you put it in your last post, I’m just at a loss for words.

  11. Gravatar of Edward Edward
    12. July 2012 at 10:29

    Major Freedom,

    You really are an incredible ignoramus aren’t you? Higher price inflation doesn’t cause higher employment IN THE LONG RUN!. Even according to Austrian doctrine. The Fed is capable of engineering short term booms. Now yes, If the Fed keeps accelerating inflation without reversing itself It will not help employment at all, and eventually bring about hyperinflation. But the long run is a totally different solar system than the short run

  12. Gravatar of Major_Freedom Major_Freedom
    12. July 2012 at 10:42

    You really are an incredible ignoramus aren’t you?

    Aww, you seem mad. Didn’t like the lesson you got yesterday?

    Higher price inflation doesn’t cause higher employment IN THE LONG RUN!

    NOT EVEN IN THE SHORT RUN EITHER.

    Even according to Austrian doctrine. The Fed is capable of engineering short term booms.

    These booms are not brought about by higher aggregate prices. You don’t understand Austrian theory. Surprised!

  13. Gravatar of dwb dwb
    12. July 2012 at 10:46

    Bernanke has done a lot of good things for the Fed, boosting transparency and so on, but he wont be remembered for that (people will say it should have been doing that all along). His legacy will be 8% unemployment and giving the structuralists too much sway. Since the day after we started measuring potential output, we have known it was uncertain. Bernanke’s Fed legacy will be making the 1970s error, in reverse.

  14. Gravatar of Misaki Misaki
    12. July 2012 at 10:46

    Sorry for somewhat spamming, but I don’t think this needs more explanation. Job creation without higher government spending, inflation, or trade barriers:

    /ɯoɔ˙ʇodsƃolq˙uɐlduoıʇɐǝɹɔqoɾ//:dʇʇɥ

  15. Gravatar of Edward Edward
    12. July 2012 at 10:47

    “You really are an incredible ignoramus aren’t you?

    Aww, you seem mad. Didn’t like the lesson you got yesterday?”

    What lesson is that? How foolish you are? :-)

    “Higher price inflation doesn’t cause higher employment IN THE LONG RUN!

    NOT EVEN IN THE SHORT RUN EITHER.

    Even according to Austrian doctrine. The Fed is capable of engineering short term booms.

    These booms are not brought about by higher aggregate prices. You don’t understand Austrian theory. Surprised!

    Not even if prices were higher than they otherwise would have been from monetary inflation. Also workers salaries are a price too. So yes the boom IS brought about from higher aggregate prices.

  16. Gravatar of Major_Freedom Major_Freedom
    12. July 2012 at 11:23

    Edward:

    What lesson is that? How foolish you are?

    The pain will go away when you pretend it didn’t happen.

    Not even if prices were higher than they otherwise would have been from monetary inflation.

    Price inflation, since inflation of the money supply doesn’t affect all goods and services equally at the same time, but rather affects some things with prices before other things, would redistribute workers according to the demand for labor. The price inflation does not increase employment.

    Also workers salaries are a price too. So yes the boom IS brought about from higher aggregate prices.

    The 2% price inflation Sumner was referring to does not include wages.

  17. Gravatar of Mark A. Sadowski Mark A. Sadowski
    12. July 2012 at 11:36

    @TA,
    “Seven of 12 members of FOMC are the Bd of Governors. Six of the 7 are Obama appointees, as far as I can tell. The 7th, Bernanke, is Obama’s renewal as Chair.”

    Elizabeth A. Duke was nominated by George W. Bush in 2008 to fill an unfinished term on the BOG. Her term expired in January but she can serve until the Senate confirms her replacement. However, Obama has not nominated anyone to replace her.

    Thus, at this point all seven are in fact Obama’s responsibility since it was he who chose to renominate Bernanke as chair in 2009. Obama now officially totally owns this “recovery.”

    @Scott N,
    “The “one” you refer to is almost certainly Charles Evans.”

    Except that Charles L. Evans is not on the FOMC this year.

    Dudley, Pianalto, Tarullo and Yellen are generally regarded as left of center. Pianalto nevertheless strikes me as a consensus seeker who will not stick her neck out. Tarullo’s main focus seems to be banking regulation so I don’t see him taking a stand on this issue either. Yellen is Vice Chair so I think it might be considered impolitic for her take such a vivid stance.

    William C. Dudley?

  18. Gravatar of ChacoKevy ChacoKevy
    12. July 2012 at 11:53

    @Mark, Thanks for pointing out my mistake about Evans; he’s an alternate. I would have thought him for sure.
    Nonetheless, I’d still like to see Evans light some hair on fire in 2014.

  19. Gravatar of Bill Ellis Bill Ellis
    12. July 2012 at 12:02

    Scott N,
    Maybe you are right.
    But the “reasons” Bernanke gave were not spelled out very convincingly to my ear. They sounded more like excuses.
    How bad could the downside be in comparison to long term unemployment with no end in sight ?

    I am no fan conspiracy stuff. I think that there could be a more rational reason. like I said no reason so far satisfies me….including that Bernanke believes that an unconventional approach would be too risky or costly compared our predicament.

    But maybe the Fed really doesn’t think the plight of the masses are enough of a concern … if it means a small cost/risk to the elite ? I find that hard to swallow…but it would not be a conspiracy theory to think Bernanke had different values than I….would it ?

  20. Gravatar of dwb dwb
    12. July 2012 at 12:06

    @mark, ChacoKevy

    the text says “participants” not “committee members,” so i am inclined to still thing its Evans (everyone is a participants on the meeting).

  21. Gravatar of dwb dwb
    12. July 2012 at 12:08

    … the minutes clearly distinguish between “members” and “participants” (although some participants like Fisher are also members heh, just not committee members).

  22. Gravatar of Mark A. Sadowski Mark A. Sadowski
    12. July 2012 at 12:11

    dwb,
    Then Scott needs to retitle this post. :)

  23. Gravatar of Morgan Warstler Morgan Warstler
    12. July 2012 at 12:23

    Misaki,

    I already solved the problem… perfectly.

    http://pegobry.tumblr.com/post/21427545322/morgan-warstler-via-steve-randy-waldman

  24. Gravatar of Mark A. Sadowski Mark A. Sadowski
    12. July 2012 at 12:31

    Morgan,
    Why does Pascal-Emmanuel Gobry (PEG) think you’re an MMTer?

  25. Gravatar of johnleemk johnleemk
    12. July 2012 at 12:38

    So…zero of the 12 FOMC members believe in following the law?

    I don’t vote in the US, but if I did, I would vote Romney, purely because I’m fed up with Obama’s inaction on monetary policy.

    The worst case scenario with Romney on the economy is he maintains Obama’s disastrous passivity towards monetary policy; we won’t be much worse off under 4 years of Romney than we have been under 4 years of Obama. But there is no way that a president as hapless as Obama deserves re-election. On the one issue where he had the potential to be as great a president as FDR, he completely punted.

  26. Gravatar of Mark A. Sadowski Mark A. Sadowski
    12. July 2012 at 12:54

    johnleemk,
    Yes, you’re right. I guess that makes it zero out of 12.

    Unfortunately in terms of monetary policy it will make little difference who is President for the next four years unless there are some deaths or if someone resigns (I assume Obama will renominate Duke or eventually get around to nominating a replacement). That’s because the only BOG terms that will expire in the next four years will be Powell’s (2014) and Raskin’s (2016).

    And whoever gets the presidential term from 2017-2021 will only get to choose two nominations as well. Obama was amazingly lucky to be able to fill the entire BOG in one term and he totally squandered it.

  27. Gravatar of Scott N Scott N
    12. July 2012 at 13:17

    Mark,

    It was Evans. I read a description of FOMC meetings once (by a former Fed official) and all of the members get to participate fully, meaning voice their view of monetary policy. However, when it comes down to voting, only FOMC members get to do that.

    Upon further inspection, the FOMC minutes confirm this:
    “In conjunction with this FOMC meeting, meeting participants–the 7 members of the Board of Governors and the presidents of the 12 Federal Reserve Banks, all of whom participate in the deliberations of the FOMC–”

    Evans gets to participate in the deliberations and air his views. He just doesn’t get to vote for the final outcome.

  28. Gravatar of Adam Adam
    12. July 2012 at 13:29

    I also want to know why “almost all” and not “all” members of the committee expected inflation to be at or below 2%. Who thinks it will be higher, and why are they on the committee?

    And how can it be that only Evans thinks the dual mandate should be the guidepost?

  29. Gravatar of Scott N Scott N
    12. July 2012 at 13:30

    The Fed says it wants new policy tools to promote greater economic activity but what this means is that the Fed wants monetary tools that (a) won’t raise inflation b) but will stimulate economic growth. In other words, the Fed is waiting for Godot.

  30. Gravatar of dwb dwb
    12. July 2012 at 13:37

    Yes, you’re right. I guess that makes it zero out of 12.

    no its not that bad, William’s definitely seems to be in favor of more action, and he wrote a nice piece in the the FRBSF newletters explaining how added reserves are not inflationary in a world of IOR.

    I think the questions comes down to:
    1. would stimulus lead to more real growth than inflation (some say no, but i there is no way to know except to try).

    2. are there costs to QE like distortions in the TSY market, etc.

    in fairness, i dont think its that they dont accept the law, i think there are some who question the employment/inflation traddeoff, and if more stimulus just results in higher inflation, many question the cost of that policy.

    of course, those people have been wrong a zillion times over the last 5 years, so its more like willful ignorance at this point.

  31. Gravatar of Mark A. Sadowski Mark A. Sadowski
    12. July 2012 at 13:39

    Scott N,
    You may have read the speech Evans gave on Monday in Bangkok:

    “In my judgment, nominal income level targeting is an appropriate policy choice and has such a safeguard. But recognizing the difficult nature of that policy approach, I have a more modest proposal: I support a conditional approach, whereby the federal funds rate is not increased until the unemployment rate falls below 7 percent, at least, or until inflation rises above 3 percent over the medium term. The economic conditionality in my 7/3 threshold policy would clarify our forward policy intentions greatly and provide a more meaningful guide on how long the federal funds rate will remain low. In addition, I would indicate that clear and steady progress toward stronger growth is essential.”

    http://www.chicagofed.org/webpages/publications/speeches/2012/07_09_12_bangkok.cfm

    So, if it was just a participant, and not a member as Scott originally implied, it probably was Evans who said that.

    Too bad he will not be able to vote for two more years.

  32. Gravatar of Scott N Scott N
    12. July 2012 at 13:52

    Mark,

    Evans has been saying that stuff very dovish stuff like that for a long time, at least since the middle of last year when he was a voting member of the FOMC (and he dissented back then because he wanted the Fed to do more).

    My impression is that the regional Fed presidents are willing to take a principled stand dovish or hawkish, but the members of the Board of Governors pretty much follow Bernanke’s lead. This is why I think the FOMC is really controlled by Bernanke. If he wants more QE, he can easily get it. The problem is that he doesn’t want it.

    There was an interesting post or article written a while back that chronicled how Bernanke’s views changed once he was nominated to the Fed. Someone went through past Fed transcripts and showed how some early presentations by Fed staff seemed to change Bernanke’s views thus explaining why he no longer believes the things he said about Japan. Everything I’ve seen from him so far seems to back up that view.

  33. Gravatar of Mark A. Sadowski Mark A. Sadowski
    12. July 2012 at 13:54

    dwb,
    “no its not that bad, William’s definitely seems to be in favor of more action, and he wrote a nice piece in the the FRBSF newletters explaining how added reserves are not inflationary in a world of IOR.”

    Yes, I liked that piece. If only more people would read it they might understand our current floor system of monetary policy.

    However, I’m concerned about Williams. Williams is to the left of Lacker (who isn’t?) and Raskin and to the right of Dudley, Pianalto, Tarullo and Yellen so I’d argue his views are similar to Bernanke’s, Duke’s and Lochart’s. (I don’t know what Powell and Stein views really are yet, and I don’t think anybody knows, but so far they have voted with everyone else.) Thus Williams may be considered a litmus of the ever important median FOMC voter.

    He gave a speech on Monday where he said:

    “We are falling short on both our employment and price stability mandates, and I expect that we will make only very limited progress toward these goals over the next year.”

    And then he said:

    “If further action is called for, the most effective tool would be additional purchases of longer-maturity securities, including agency mortgage-backed securities.”

    http://www.frbsf.org/news/speeches/2012/john-williams-0709.pdf

    I’m sorry but that almost caused my head to explode.

    Isn’t the word “if” highly, highly superfluous?!?

  34. Gravatar of Gabe Gabe
    12. July 2012 at 13:54

    Bill Ellis,
    I don’t think the Fed is being tight in order to elect a Democrat or Republican. You know they offered David Rockefeller the Fed head job and he told them to hire Volcker(his lifelong employee)? Some people have athe power to call up the Fed head and talk about whatever they want.

    Those people are represented by the issues where mainstream democrats and republicans AGREE…the parts where they differ are window dressing.

    Democracy is a tool of control. The elite had to bring it about to try and get control back from the masses. They are succeeding, but the internet is now making it harder. People are begininning to see.

    TPTB want a unified Europe. Economic pressure needs to continue in Europe until they come to some “agreement” that is satisfactory to those who want world government. Doesn’t have to be 100% union but some combination of higher taxes and lower soveriegnty is needed to satisfy TPTB. Until they get that, expect all the BIS linked central banks(including the US fed) to provide little relief.

  35. Gravatar of Gabe Gabe
    12. July 2012 at 13:58

    call me a conspiracy theorist if you wish…but I simply try to create though models with predictive value…Sumners has no predictive value…he merely hopes that Bernanke will magically see his logic and react accordingly.

    Sumner thinks that bernanke is merely hiding in his bat cave because he is a very busy important man and certainly couldn’t be expected to answer arguments from lowly Bentley professor.
    I have more respect for Sumner than that, but I still think it is somehwat wizard of Oz childish to have this view of the fed head. They hide behind their curtains of secrecy and pre-typed BS speaches because their arguments are not sound, nor logical.

  36. Gravatar of Mark A. Sadowski Mark A. Sadowski
    12. July 2012 at 14:12

    Scott N,
    “Someone went through past Fed transcripts and showed how some early presentations by Fed staff seemed to change Bernanke’s views thus explaining why he no longer believes the things he said about Japan.”

    That someone is Laurence Ball:

    “Sections IV-VI review the broader evolution of Bernanke’s views. I find that they changed abruptly in June 2003, while Bernanke was a Fed Governor. On June 24, the FOMC heard a briefing on policy at the zero bound prepared by the Board’s Division of Monetary Affairs and presented by its director, Vincent Reinhart. The policy options that Reinhart emphasized are close to those that the Fed has actually implemented since 2008; Reinhart either ignored or briefly dismissed the more aggressive policies that Bernanke had previously advocated.”

    http://papers.nber.org/papers/w17836

    So it all happened in June 2003, and apparently it was Vincent Reinhart’s fault.

    However, it’s important to remember that Bernanke was into Inflation Targeting (IT) from a long way back so Ball is mostly talking about policy tools rather than targets.

    I think Bernanke’s fundamental problem is he is into IT. Being that IT is both inflation and rate targeting rather than level and nominal income targeting means you’re about as far away from NGDPLT as one can get and still be talking about monetary policy.

  37. Gravatar of Gabe Gabe
    12. July 2012 at 14:15

    Sumner makes lots of good arguments questioning the Fed. Why doesn’t the Fed address them?

    When I made lots of arguments to my parents about why Santa Claus was not a good explanatory theory of how christmas presents are distributed around the world I took their silence as evidence that I was correct.

    It works the same way with the Fed..their silence is evidence that they have no good arguments. If they opened their mouths and started a dialouge it would remove all doubt…as it is people like Sumner and Nunes still hold out Hopey and Chanhgey faith based beliefs.

    As long as TPTB can hold on to the faith-based, Hopey Changer, self delusional crowd then they can maintain power. No need to address the growing crowd of disbelievers.

    “The illusion of freedom will continue as long as it’s profitable to continue the illusion. At the point where the illusion becomes too expensive to maintain, they will just take down the scenery, they will pull back the curtains, they will move the tables and chairs out of the way and you will see the brick wall at the back of the theater.”
    ― Frank Zappa

  38. Gravatar of Mark A. Sadowski Mark A. Sadowski
    12. July 2012 at 14:26

    Scott N,
    I sometimes imagine that Vincent Reinhart’s conversion of Bernanke on that June day in 2003 went something like this:

    http://www.youtube.com/watch?v=NKkRDMil0bw

    That’s the “World is a Business” scene from the movie Network (1976) where CCA Chairman Arthur Jensen (Ned Beatty) explains the “corporate cosmology” to an attentive UBS Anchorman Howard Beale (Peter Finch).

  39. Gravatar of dwb dwb
    12. July 2012 at 14:29

    @Mark,
    Isn’t the word “if” highly, highly superfluous?!?

    i think people are reading way too much into that “If.” It was a pretty strong call for more action. As a voting policy maker it *always* behooves one to be conditional.

  40. Gravatar of Scott N Scott N
    12. July 2012 at 14:53

    Damn you Vincent Reinhart, damn you!

  41. Gravatar of Full Employment Hawk Full Employment Hawk
    12. July 2012 at 14:55

    Bernanke’s reappointment was clearly a major blunder on the part of Obama. And one of the last 2 appointments was a Republican, which was needed to get the Republicans to let the positions be filled. But that leaves 4 other appointments made by Obama. Why are they missing in action. Why do they not have their hair on fire about getting he unemployment rate down?

  42. Gravatar of Full Employment Hawk Full Employment Hawk
    12. July 2012 at 14:56

    “I have heard that it is to keep oil prices low so Obama wins.”

    That was in the Onion and therefore satire.

  43. Gravatar of Full Employment Hawk Full Employment Hawk
    12. July 2012 at 15:05

    “the FOMC believes that unconventional monetary policy tools have large costs that can only be justified if things get much worse.”

    As if an economy in a depression did not have immense costs.

    If one is not concerned with the cost of the hardship and misery and suffering of the unemployed and underimployed, at least one should be concerned about the huge cost of the inefficiency of having output way below potential output.

    The huge amounts of income lost by the economy being way below potential output is not put into some escrow account so that it can be drawn on in the future. The income is lost forever and can never be regained. Any possible costs resulting from unconventional monetary policy pale in comparison.

    Normally economists have an efficiency fetish. But the massive inefficiency resulting from income being way below full employment income does not bother most of them.

  44. Gravatar of Lorenzo from Oz Lorenzo from Oz
    12. July 2012 at 15:09

    After 1928-32, no one should have any illusions about how stupid (read bureaucratically insular in disastrous ways) central bankers can be.

    In 1928-32, they did not have some deep dark plan to help one side of politics, to enrich bankers or whatever. They just had daft policy beliefs that they followed to the bitter end.

    They were in a gold standard world without actually understanding the system they were running and its implications. Now they are in an inflation targeting world without actually understanding the system they were running and its implications. It’s a re-run. You read Eichengreen and Temin on the gold standard and the Great Depression, take out “gold standard” put in “inflation targeting” and it all just works; except sucking gold out of the monetary system in 1928-32 was much worse in its effects that doing IT badly in 2008-?.

    And, in both cases, they actually failed to sensibly run the system they were supposed to be running. They were committed to it (way beyond sense) but ran it amazingly badly due to a disastrously narrow conception of what their aim was.

  45. Gravatar of Full Employment Hawk Full Employment Hawk
    12. July 2012 at 15:16

    “You don’t understand Austrian theory”

    That is a plus, not a minus. Once upon a time Austrian economics was a respectable approach to economics. Economists like Boehm-Bahwerk and Menger are highly respected economists. But Austrian economics discredited itself in the 1930 with its patently false theory of business cycles. By the present time it has deteriorated into an inward looking cult which in many ways is to economics like scientology is to religion.

    The optimal approch toward Austrian economics to take by both monetarists of all stripes and by Keyensians is to simply ignore it as irrelevant.

  46. Gravatar of Misaki Misaki
    12. July 2012 at 15:27

    >I already solved the problem… perfectly.

    From the link: “Expect 30M to register so approx $345B is our cost”

    52% of people are opposed to government spending to create jobs.

  47. Gravatar of johnleemk johnleemk
    12. July 2012 at 15:35

    Has anyone seen this yet? http://economics21.org/commentary/e21s-open-letter-ben-bernanke

    This is extremely depressing. The credentials of the signatories, who believe that current monetary policy “risk[s] currency debasement and inflation” and “disagree with the view that inflation needs to be pushed higher” include:

    Former Chairman, President’s Council of Economic Advisors

    Former Associate Director, U.S. Office of Management and Budget

    Former Senior Economist, Board of Governors of the Federal Reserve

    Former Director, Congressional Budget Office

    Former Deputy Assistant Treasury Secretary

    Former Undersecretary of Treasury for International Affairs

    They include John B. Taylor, he of the Taylor rule. What hope is there for economics when even the policy establishment is convinced that one of the fundamental prescriptions of macro 101 (“print more money in a demand crisis”), which they helped write the textbook on, is worthless?

  48. Gravatar of johnleemk johnleemk
    12. July 2012 at 15:37

    The only good thing that can be said about that letter is it was written 1 1/2 years ago, so it doesn’t necessarily reflect the current views of those economists. Maybe with another ~18 months of low inflation we’ll be able to convince another economist or two. In a century maybe NGDPLT will actually be regarded as a reasonable idea.

  49. Gravatar of Full Employment Hawk Full Employment Hawk
    12. July 2012 at 15:45

    “Price inflation, since inflation of the money supply doesn’t affect all goods and services equally at the same time, but rather affects some things with prices before other things, would redistribute workers according to the demand for labor. The price inflation does not increase employment.”

    David Hume in his 1752 essay OF MONEY already explained why price inflation resulting from an increase in the money supply causes output to increase in the short run. And the fact that the increases in the money supply affects some prices before it affects others IS THE VERY REASON that the increase in the money supply causes output to increase in the short run. The relevant exerpt from Hume, where he explains this, can be found on page 278 of MACROECONOMICS by N. Gregory Mankiw 7th edition. Hume’s model was an early sticky-price macroeconomic model.

    Major Freedom definitely needs to read this. He would learn some economics that is outside of his Austrian ideological box.

  50. Gravatar of Mark A. Sadowski Mark A. Sadowski
    12. July 2012 at 15:45

    Lorenzo from Oz,

    Bruce Bartlett recently had this to say in the NYT article called “In Lost Opportunity of 1932, Are There Lessons for Today?”:

    “In testimony before the Senate Banking Committee on May 13, Fisher strenuously disagreed. He noted that the economy was showing some signs of life because of an expansion of the money supply that the Fed had adopted in the spring. But businesses had no assurance that it would continue, which was their prime source of uncertainty. The Goldsborough bill would guarantee a continuation of easy money until recovery had been achieved, Fisher argued.

    He was prescient. In July, the Fed halted its policy of quantitative easing and the recovery was quickly aborted. In a March 2006 article in the Journal of Economic History, the economists Chang-Tai Hsieh and Christina Romer suggest that pressure from the regional Federal Reserve bank presidents was instrumental in ending the easing. With ample reserves in the banking system and very low interest rates there was nothing to be gained by further easing, they asserted.”

    From Chang-Tai Hsieh and Christina Romer (Pages 169-170):

    “Why Did the Federal Reserve End the Monetary Expansion?

    If the Federal Reserve was not concerned about a speculative attack, why did it cease its open market purchases after only five months? Our reading of the Harrison papers suggests that the Federal Reserve decided to slow the monetary expansion in mid-June in part because its model of monetary policy led it to believe that monetary conditions were already loose and that further purchases would be of little use. As discussed by Elmus Wicker, David Wheelock, and Allan Meltzer, Federal Reserve officials in the 1930s focused on bank borrowing and excess bank reserves as their main indicators of monetary ease or tightness. 85 For example, on 12 May Harrison told the Board of the Federal Reserve Bank of New York that: “The best yardstick to use [for measuring the success of monetary policy] … would be the figures of member bank reserves.” 86 More importantly, policymakers at the Federal Reserve believed that once excess reserves were plentiful, further monetary easing could do little to stimulate recovery. At the same meeting, Harrison stated that:

    “When the figures of member bank reserves are sufficiently high to produce adequate pressure upon the banks and to provide adequate credit for business as recovery sets in, we shall probably have done our part. If the commercial banks can’t or don’t use the credit which we provide, that is another problem.” 87

    A related view was that, because expansion would be ineffective when there were already large quantities of excess reserves, it did not make sense to expand when the demand for funds was low. Instead, Federal Reserve officials believed that the best time to expand was when confidence was high, or at least improving. For example, in reviewing the origin of the open market purchase program on 30 June, Harrison said: “It was thought best, however, not to use our ammunition until the chances of effective response from the banking and business community would favor the success of our undertaking.” 88

    This model of the economy hastened the end of the open market purchase program in two ways. First, in late May and early June, some Federal Reserve officials believed that the program had already worked. The program had made excess reserves plentiful and so further expansion was not needed. On 26 May Harrison told his directors that “excess reserves of member banks are now at about the point where it had been thought they should be maintained.” 89 Goldenweiser recounts that “Federal Reserve authorities felt that their monetary policy had made bank credit expansion possible and that they were powerless to induce banks to lend more freely or even to arrest loan liquidation.” 90 Second, when a wave of banking panics in Chicago in late June led Federal Reserve officials to fear that widespread banking difficulties were about to begin again, some monetary policymakers concluded that further open market purchases would have no impact. Harrison, for example, said that: “There is no sense … in our purchasing Government securities merely as an offset to currency hoarding. That is an impossible task and an inversion of our program, which was based on a revival of confidence in the banking and credit structure.””

    From their conclusion:

    “But, our evidence from the one time that the Federal Reserve undertook monetary expansion in the early 1930s is that the Federal Reserve actually had substantial room to maneuver. For this reason, we are inclined to agree with Friedman and Schwartz that the Federal Reserve’s failure to act was a policy mistake of monumental proportions, not the inevitable result of the U.S. adherence to the gold standard.”

    http://elsa.berkeley.edu/~cromer/JEH_March06.pdf

    I find the then apparently prevalent argument that the Fed had done a great deal and any more would be unnecessary, as demonstrated by the ampleness of reserves and the low interest rates, as well as the intermittent targetless mode of quantitative easing, to be chillingly similar to our own times. It’s hard to believe that less than two years later FDR would devalue the dollar by 40% and set off the greatest peacetime economic expansion in US history.

  51. Gravatar of Full Employment Hawk Full Employment Hawk
    12. July 2012 at 15:51

    “This is extremely depressing. The credentials of the signatories, who believe that current monetary policy “risk[s] currency debasement and inflation” and “disagree with the view that inflation needs to be pushed higher” include:”

    Note that these are all FORMER officials. Most, if not all, of these held these positions under Republican adminstrations. This is like former members of the Hoover administration defending the gold standard and should not be surprising. Fortunately Roosevelt did not make the mistake of reappointing Hoover’s head of the Fed.

    What is really depressing is the failure of Democratic officials not having their hair on fire with respect to getting the unemployment rate down.

  52. Gravatar of johnleemk johnleemk
    12. July 2012 at 15:58

    FEH,

    Not really. This would be more like members of the Hoover administration criticising FDR for pursuing their policies. Under these Reagan- or Bush-era officials, inflation was well, well, well above 1%, and you didn’t hear any chicken little stories about hyperinflationary risk then.

  53. Gravatar of Mark A. Sadowski Mark A. Sadowski
    12. July 2012 at 15:59

    johnleemk,
    That was the anti-QE2 letter. Who’s circulating something that ancient?

  54. Gravatar of Bill Ellis Bill Ellis
    12. July 2012 at 18:08

    Full Employment Hawk,
    Was that one really in the Onion? hahaha. I have seen it being offered (seriously) by righties on comment threads. I never took it seriously, I though it was politically motivate push back of Krugman’s speculation.

  55. Gravatar of Morgan Warstler Morgan Warstler
    12. July 2012 at 18:27

    Sadowski,

    Misaki, this is NOT govt. spending to create jobs.

    1. We decide people need a certain Guaranteed Income to live.

    2. In order to reduce that expenditure, we auction their labor off tot the highest private sector bidder.

    So:

    1. the 52% – those are the top half, those are MY PEOPLE – they LOVE buying the cheap cheap cheap labor for what it is really worth.

    2. this is actually LESS GOVT. intrusion then the current system.

    Govt. can give people shit, but it cannot fiat the value of their work.

    Minimum Wage is far more messy form of govt. market intrusion than aid.

    Sadowski,

    He was confused and since has bad the cleared up.

    Always remember, NOBODY has a standing argument against my monkey judo.

    MMT is a joke.

  56. Gravatar of libfree libfree
    12. July 2012 at 19:02

    Scott,

    How does current Fed policy effect its member banks? Do banks benefit from deflationary policy as opposed to general economic growth?

  57. Gravatar of Full Employment Hawk Full Employment Hawk
    12. July 2012 at 19:40

    “Was that one really in the Onion?”

    Unfortunately I cannot remember what my source of the information was, but I believe that the source was reliable.

  58. Gravatar of Full Employment Hawk Full Employment Hawk
    12. July 2012 at 19:40

    “Was that one really in the Onion?”

    Unfortunately I cannot remember what my source of the information was, but I believe that the source was reliable.

  59. Gravatar of Full Employment Hawk Full Employment Hawk
    12. July 2012 at 19:40

    “Was that one really in the Onion?”

    Unfortunately I cannot remember what my source of the information was, but I believe that the source was reliable.

  60. Gravatar of Full Employment Hawk Full Employment Hawk
    12. July 2012 at 19:43

    YOU SHALL NOT PRESS DOWN UPON THE BROW OF LABOR

    THIS CROWN OF THORNS!

    YOU SHALL NOT CRUCIFY AMERICA

    UPON A FIXED INFLATION TARGET!

  61. Gravatar of Major_Freedom Major_Freedom
    12. July 2012 at 19:43

    Full Hawk:

    David Hume in his 1752 essay OF MONEY already explained why price inflation resulting from an increase in the money supply causes output to increase in the short run. And the fact that the increases in the money supply affects some prices before it affects others IS THE VERY REASON that the increase in the money supply causes output to increase in the short run.

    Output doesn’t increase in the short run. Means are diverted and output is changed.

    Besides, the context was employment.

  62. Gravatar of Major_Freedom Major_Freedom
    12. July 2012 at 19:47

    Full Hawk:

    “You don’t understand Austrian theory”

    That is a plus, not a minus.

    Ignorance is never a plus, especially when what you are ignorant about is so very relevant.

    Once upon a time Austrian economics was a respectable approach to economics.

    It still is.

    Economists like Boehm-Bahwerk and Menger are highly respected economists. But Austrian economics discredited itself in the 1930 with its patently false theory of business cycles.

    Discredited according to whom? The Austrian theory of the business cycle is certainly not “patently false.” It is the best theory there is.

    By the present time it has deteriorated into an inward looking cult which in many ways is to economics like scientology is to religion.

    Ad hominem fallacy.

    The optimal approch toward Austrian economics to take by both monetarists of all stripes and by Keyensians is to simply ignore it as irrelevant.

    To your own peril. No wonder you don’t understand why the business cycle takes place.

  63. Gravatar of Full Employment Hawk Full Employment Hawk
    12. July 2012 at 20:00

    George Lakoff has convincingly argued that whether an argument succeeds in getting accepted or not depends crucially on how it is framed.

    Calls for more expansionary monetary policy in terms of setting a higher inflation target, while technically correct fails on the framing criterion because most people consider more inflation as a bad thing and therefore will not support deliberately increasing the rate of inflation, even to end a depression.

    Framing it in terms of setting a higher target for NGDP growth, on the other hand, can succeed on the framing basis. The argument needs to be popularized a little more for more genearal audiences, as follows:

    Lack of demand is causing the economy to remain depressed because firms will not increase their output if they believe that there is no demand for additional output, so that producing more will cause them to get stuck with goods they cannot sell at a profit. Therefore expansionary monetary policy is needed to make the total demand for final goods and services, that is aggregate demand, grow more rapidly. That will cause firms to increase their production and hire more workers. As the increase in aggregate demand causes output to grow, the increased production will cause the costs of inputs, especially raw materials, to rise. Therefore the increased growth in output will cause prices to rise. This means that in order to get the economy out of a depression, since this requires a major increase in production, for a time, a temporary increase in the rate of inflation has to be accepted. The only way to avoid any increase in inflation is to prevent the economy from growing and keeping it depressed. Therefore a rigid enforcement of a low, like 2% for example, inflation target requires keeping the economy from growing by not giving it the needed monetary stimulus. Therefore until the economy has come out of the depression a temporary increase in the inflation target has to be permitted.

    (This requires considerable redrafting to improve the wording, but it gets at the gist of the idea.)

  64. Gravatar of Full Employment Hawk Full Employment Hawk
    12. July 2012 at 20:12

    “So it all happened in June 2003, and apparently it was Vincent Reinhart’s fault.”

    So Bernanke turns his back on his own lifelong research program on the basis of one briefing?

  65. Gravatar of Full Employment Hawk Full Employment Hawk
    12. July 2012 at 20:27

    “Full Hawk:”

    All right, you are trying. I will give you credit for the improvement and respond this ONE time.

    “Output doesn’t increase in the short run. Means are diverted and output is changed.”

    You really do need to read the relevant part of David Hume’s 1752 essay OF MONEY I referred to above that clearly explains why output is increased in the short run.

    Hume’s argument is actually even more relevant when the economy is in a depression at the time the money increases so that firms have a lot of idle resources, including labor, they can employ to increase production.

    “Besides, the context was employment.” Firms increase output by employing additional resources, including labor.

  66. Gravatar of Full Employment Hawk Full Employment Hawk
    12. July 2012 at 20:45

    “Bernanke said, “Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna [Schwartz, Friedman's coauthor]: Regarding the Great Depression. You’re right, we did it. We’re very sorry.”

    Well they’re doing it again. Since the financial crisis has abated, the Fed has been every bit as inept dealing with the Little Depression as the Fed was in dealing with the Great Depression. It’s deja vu all over again.

  67. Gravatar of Saturos Saturos
    13. July 2012 at 00:08

    http://www.businessinsider.com/paul-krugman-on-the-deficit-2012-7

    I like how his views evolved just as the administration changed.

  68. Gravatar of W le B W le B
    13. July 2012 at 00:23

    Scott N hits the nail on the head when he writes:

    “The problem isn’t that the other members of the FOMC are adhering to a single mandate. The problem is that they don’t believe higher inflation will bring unemployment down faster. They think 2% inflation or less will bring down unemployment the fastest.”

    B of England types are saying the same thing here (and it must have been the consensus view at the BIS conference): ‘lower inflation means people will have more money to spend’

    Can someone explain their logic to me?

  69. Gravatar of Mr. Spock Mr. Spock
    13. July 2012 at 00:51

    “lower inflation means people will have more money to spend’ Can someone explain their logic to me?”

    IRRATIONAL AND ILLOGICAL!

  70. Gravatar of ChacoKevy ChacoKevy
    13. July 2012 at 06:51

    @Saturos: Isn’t it possible, though, that it isn’t political? Opposing war and the unfunded medicare part D in the early 2000s and supporting deficit spending now seems perfectly acceptable under Keynesian countercyclical fiscal policies.
    Six bucks and a kidney says he’ll still be calling for fiscal expansion if Romney wins.

  71. Gravatar of ssumner ssumner
    13. July 2012 at 06:56

    Bill, Most economists support the Fed, and most economists vote for Obama.

    Adam, Lacker dissented. I think he fears high inflation.

    gabe, You said;

    “Sumner thinks that bernanke is merely hiding in his bat cave because he is a very busy important man and certainly couldn’t be expected to answer arguments from lowly Bentley professor.”

    You really are an idiot.

    libfree. No, banks would clearly be better of with monetary stimulus.

  72. Gravatar of ssumner ssumner
    13. July 2012 at 07:06

    Johnleemk, thanks!, I added that letter as an update to my newest post.

    Saturos, It’s unusual for Krugman to admit he was wrong.

  73. Gravatar of Mark A. Sadowski Mark A. Sadowski
    13. July 2012 at 07:41

    Saturos,
    “I like how his views evolved just as the administration changed.”

    Form the Business Insider:
    “He notes two things: One is that the deficit spending under Bush was totally wasteful, and that that should have been time to pay down debts. But he also says he’s learned from watching the US and Japan that it’s much harder for a country to have a debt crisis than he previously appreciated.”

    It wasn’t due purely to the change in administrations. I was rereading this recently:

    http://www.brookings.edu/~/media/files/programs/es/bpea/1998_2_bpea_papers/1998b_bpea_krugman_dominquez_rogoff.pdf

    Krugman used to be deeply concerned about public debt and thought Japan should avoid fiscal stimulus primarily because of that. My sense is that Krugman has become much more market focused (he keeps one eye firmly on the bond rates these days) and is less convinced that central banks are politically willing to raise growth expectations. It’s primarily the example of Japan has changed his views.

  74. Gravatar of Financeroll English | Monetary policy: The inflation question Financeroll English | Monetary policy: The inflation question
    13. July 2012 at 09:00

    [...] also suggests that a change in denunciation to something like this:  In one participant’s judgment, suitable financial process would lead to acceleration modestly [...]

  75. Gravatar of Major_Freedom Major_Freedom
    13. July 2012 at 09:05

    ssumner:

    Bill, Most economists support the Fed, and most economists vote for Obama.

    Supporting, advocating, voting, opining, agreeing…

    No scientific rigor.

  76. Gravatar of Major_Freedom Major_Freedom
    13. July 2012 at 09:07

    Full Hawk:

    “Output doesn’t increase in the short run. Means are diverted and output is changed.”

    You really do need to read the relevant part of David Hume’s 1752 essay OF MONEY I referred to above that clearly explains why output is increased in the short run.

    You really need to do something other than committing the fallacy of authority.

    “Besides, the context was employment.” Firms increase output by employing additional resources, including labor.

    Not necessarily. You’re ignoring technological progress and capital accumulation, which can increase output without a corresponding increase in labor.

    You just snuck in yet another unstated assumption.

  77. Gravatar of Misaki Misaki
    13. July 2012 at 10:17

    >Misaki, this is NOT govt. spending to create jobs.
    >1. We decide people need a certain Guaranteed Income to live.
    >2. In order to reduce that expenditure, we auction their labor off tot the highest private sector bidder.

    It requires increased government spending for it to work, because the government would be making up the difference between the offered wage rate and the ‘guaranteed income’. The rest is just semantics.

  78. Gravatar of Misaki Misaki
    13. July 2012 at 10:19

    For example: I hire someone to read books, and offer them $1 per hour. We agree to split the remaining $7 per hour that the government provides. Maybe this would be illegal, but people already sell food stamps and something like this would be just as easy, or easier, to do.

  79. Gravatar of Misaki Misaki
    13. July 2012 at 10:30

    >As the increase in aggregate demand causes output to grow, the increased production will cause the costs of inputs, especially raw materials, to rise. Therefore the increased growth in output will cause prices to rise. This means that in order to get the economy out of a depression, since this requires a major increase in production, for a time, a temporary increase in the rate of inflation has to be accepted. The only way to avoid any increase in inflation is to prevent the economy from growing and keeping it depressed.

    Sorry, you fail at economics. Inflation has nothing to do with the cost of goods in real terms, only their cost in nominal terms. Higher demand will mean that real commodity resource prices will increase, unless accompanied by an equal increase in production (or even overproduction) but this can easily mean lower nominal prices for other goods. An economy can grow while its currency is deflating, I think Japan is one example.

    And despite inflation being lower than target the US economy is growing.

    Though in practice, to quickly create more jobs and have higher growth rate without higher inflation in the US would require higher taxes which probably won’t happen, but if we lose the obsession with GDP growth rate and just focus on jobs and efficiency (and the environment) we can create jobs without higher government spending OR inflation OR bubbles OR trade barriers, as described here:
    /ɯoɔ˙ʇodsƃolq˙uɐlduoıʇɐǝɹɔqoɾ//:dʇʇɥ

  80. Gravatar of Misaki Misaki
    13. July 2012 at 11:08

    >‘lower inflation means people will have more money to spend’
    >
    >Can someone explain their logic to me?

    Wages rise slower than inflation, and people are already willing to invest in inflation-adjusted government bonds with negative real interest rates.

  81. Gravatar of Full Employment Hawk Full Employment Hawk
    13. July 2012 at 12:46

    “that clearly explains why output is increased in the short run.
    You really need to do something other than committing the fallacy of authority.”

    How is recommending something because it CLEARLY AND CORRECTLY EXPLAINS THE ISSUE committing the fallacy of authority?

    Your committment to the Autrian ideology and accepting its dogmas as having been proven and established is committing the fallacy of authority.

    “Firms increase output by employing additional resources, including labor. Not necessarily. You’re ignoring technological progress and capital accumulation”

    This is sophistry. I did not say that THE ONLY WAY FIRMS INCREASE OUTUT is by employing additional resources. As you argued “the context was employment.” Therefore in this context the effect of changes in output on employment was the relevant relationship and technological progress and capital accumulation were ignored as irrelevant. In addition, the discussion was about the short run, in which technological progress and capital accumulation are minor factors and therefore can be ignored.

  82. Gravatar of Major_Freedom Major_Freedom
    13. July 2012 at 15:14

    Full Hawk:

    How is recommending something because it CLEARLY AND CORRECTLY EXPLAINS THE ISSUE committing the fallacy of authority?

    YOU HAVEN’T SHOWN IT IS CORRECT. You just dropped it. Without making an argument of your own, you stand in an appeal to authority position.

    Hume stated:

    “In my opinion, it is only in this interval or intermediate situation, between the acquisition of money and rise of prices, that the encreasing quantity of gold and silver is favourable to industry.”

    It is Hume’s opinion. Where is the logic? The evidence?

    Your committment to the Autrian ideology and accepting its dogmas

    Ad hominem and straw man. Calling it a dogma without justification is ad hominem. Saying I accept any such dogmas is a straw man and not my actual argument.

    as having been proven and established is committing the fallacy of authority.

    Proof is not fallacy of authority. That’s exactly what it isn’t.

    “Firms increase output by employing additional resources, including labor. Not necessarily. You’re ignoring technological progress and capital accumulation”

    This is sophistry.

    This is more ad hominem.

    I did not say that THE ONLY WAY FIRMS INCREASE OUTUT is by employing additional resources.

    I DIDN’T SAY YOU DID SAY THAT. I said your statement makes no mention of technology.

    The context was whether or not higher prices increases employment. This is the context that you have completely glossed over in everything you have said. You referenced Hume without showing how his “opinion” is correct.

    As you argued “the context was employment.” Therefore in this context the effect of changes in output on employment was the relevant relationship and technological progress and capital accumulation were ignored as irrelevant.

    The effect of changes in output on employment? What is this? Now you’re switching to the claim that more output increases employment?

    Can you not maintain consistency or what?

    In addition, the discussion was about the short run, in which technological progress and capital accumulation are minor factors and therefore can be ignored.

    Ignorance is bliss.

  83. Gravatar of Full Employment Hawk Full Employment Hawk
    14. July 2012 at 10:11

    “Where is the logic? The evidence?”

    ONE place you can find it is on page 278 in MACROECONOMICS, 7th edition, by N. Gregory Mankiw. And no, I am not going to do the work for you by typing this material here. You are going to have to read it by yourself.

    “Now you’re switching to the claim that more output increases employment?” I’m not switching anything. In the short run, especially when the economy is in a depression, increases in output increase employment. Initially firms can increase output with the same amount of employment, but significant increases in output require additional workers to be possible.

    The rest of the stuff you posted is not worth replying to.

  84. Gravatar of Winston Winston
    15. July 2012 at 02:18

    “WAR IS PEACE

    FREEDOM IS SLAVERY

    IGNORANCE IS STRENGTH”

    They´re just doing it in a more sophisticated way than back in “1984″, except for certain inept authoritarian regimes who ended up with a loss of control over their impoverished populations. The Arab Spring is a glimpse of hope but TPTB are certainly busy trying to “restore the order”, to teach us that resistance is useless.

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