October 19

central planners: the smartest people in the world

central planners are the smartest people in the world. the central planner of the U.S. – Ben Bernanke, Chairman of the Fed – knows exactly what I, as well as 300 million other people, are going to do with our money!

or not. earlier this year, I had a discussion with a friend about how, later this year, we would see inflation due to the massive amount of money that would have to be printed to compensate for the trillions in bailouts and other imaginary money the Fed was going to create. he argued that central economic planning was a good thing because it evens out the highs and lows in the economy, so that we don’t have depressions, and recessions aren’t so bad, etc.

theoretically, he was right. it would be great to be able to smooth out the economy! the problem is, nobody on this earth could ever understand the spending patterns of even a handful of other random people, yet alone of 300 million. throw on top of that the fact that central planners must be totally incorruptible – that is, they must never make decisions that would unfairly benefit themselves or anyone else. if such a human being exists, I assure you, they will not be working a government job.

until the U.S. economy was centrally planned, the value of the dollar had not really deviated since it was created. however, since the Fed was reinstated in the early 1900s, the dollar has lost 95% of its value. tell me – is the Fed doing its job?

recently, the DOW hit 10,000. great! within the same week, gold hit an all-time high against the dollar. to give a quick economics lesson, gold is still the “unofficial” international standard – when gold rises in USD, the value of the USD has dropped, since it requires more USD to purchase the same amount of gold. what this means is that the actual value of the DOW today as compared to another year is roughly equal to (today’s DOW * (gold then / gold today)). the value of the DOW today, only 5 years ago, would be only at 4,000 (it was actually at 10,000 then). the dollar has lost 60% of its value in half of one decade. yes, all this to say two words: massive inflation. tell me – is the Fed doing its job?

basically, the concept of central planners means that they not only know how I should spend my money (better than I do), but that they know how I will spend my money (better than I do!). and on that notion, I would have to disagree. I hope you would too.

[Bailout and Stimulus] spending will only stimulate sectors of the economy that are failing. This is like trying to rid the world of gravity by throwing things up in the air. – Ron Paul

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Posted October 19, 2009 by calenfretts in category "economy", "politics