29 August 2008

“Blanchflower is an enemy of the people.”

So says Alice.  And she’s right.

Explanation: Inflation is rampant, interest rates are too low and need to go up.  But Blanchflower thinks they should come down.  Dumbass.

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  1. Actually, Alice’s analysis of US growth figures isn’t quite accurate.  You see countering inflationary pressures is a current contraction on the values of real property.  So when the cost of land drops like it has been in many parts of the US it does counteract the inflationary pressure on the currency due to the credit crunch.  In other words, people are willing to give breaks on interest rates to get real property (land, homes, etc...) sold which is keeping the interest rates low.  Now the Federal Reserve could hike the interest rates to banks and other lending institutions but that would essentially break the back of the Federal Reserve system as lenders would just do an end run around the Federal Reserve and not obtain their funds for lending from the Federal Reserve.  Instead they’d go through private sources of capital and poof our banking system would be outside of government control by competition.  So the Federal Reserve can’t raise interest rates or the banks and other lending institutions will simply cease borrowing money from the Federal Reserve and borrow it from somebody else.

    Posted by Maldain on 03 September 2008 at 10:28pm

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