Wall Street Journal mentions RP
Posted June 26th, 2008 by Orwell1984
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Conventional wisdom holds that inflation rises with government spending: greater demand pushes prices up, and the state prints more money to keep up. For proponents of small government, such as Ron Paul, the insidiousness of the “inflation tax” is a rallying cry for peeling back government spending. (And, in Paul’s case, implementing the gold standard.)
But does the magnitude of inflation depend on what the government is spending money on?
A study published recently by the Federal Reserve Bank of St. Louis says it does. Contrary to conventional wisdom, a comparison of 80 countries by economists Song Han of the Federal Reserve Board staff in Washington and Casey B. Mulligan of the University of Chicago found a significant negative correlation between nondefense government spending and inflation. That is, as countries spend more on nonmilitary expenditures, inflation tends to decrease.
On the other hand, Han and Mulligan report a strong positive relationship between inflation and government size in times of war. Wars tend to lead to sudden booms in government spending. Using U.S. and U.K. data from as long ago as the 18th century, the authors found inflation rising as wars began and falling as they ended. The only exception was the aftermath of Vietnam War –one of the few American wars, the authors note, that didn’t end in an unambiguous victory for the United States. “Inflation responds strongly,” they write, “to the nature of how a war ends.” –Anton Troianovski
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That's not inflation
That's not inflation.
If the government balanced the budget, there would be no inflation. If the spending caused greater demand and higher prices, then the government could inflate, but it also could raise taxes to keep up. But yes, at some point the amount the government has to spend exceeds what it can bring in, raising revenue is not an option, and so yes, at that point, if it does not reduce spending it must print money and thus cause inflation.
"Know what you know, know what you don't know, and understand and appreciate the distinction."
Minarchism
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This is true! The article
This is true! The article is just showing that the Wall Street Journal is starting to take RP and Austrian Economics in small doses. They are at least admitting that war spending increases inflation.
Its not surprising that a lot of people are confused about what inflation is. The Fed believes that it doesn't create inflation, it's fighting inflation.
The Fed is like a dog chasing it's own tail!
Small doses...spoon feeding
It appears that perhaps the sheeple can only be fed small doses of Ron Paul at a time. Most complaints I've heard from others about him is that he wants too much....too fast....and that scares the average person. We (revolutionaries) have all taken an over-dose, and lived to tell the tale. Let's be thankfull, I guess, that RP's wisdom is still being sought out and reported on.
It seems like that's what
It seems like that's what Bob Barr is doing. He took the RP message and repackaged it into smaller units. Instead of abolish in whole government departments, he'll streamline them and cut costs. Instead of de-criminalizing all drugs, he'll decriminalize marijuana and leave it to the states. Instead of saying, lets close down all foreign US military bases, he saying lets close down south korea and some small bases, and get out of Iraq.
This is wise because even Ron Paul can't do everything he wants in 4 years; not even 8 years if he got re-elected. These things really have to happen increntally. Because even though "change" is the most used word in this election, people are AFRAID OF CHANGE (especially the elderly). So it has to be gradual...