Richard Viguerie has posted an interesting article criticizing John McCain's lack of ideological focus. He notes that:
"The problem is that McCain doesn’t have a coherent set of ideas with which he can simultaneously fire up the conservative base and attract independents. He’s a part-time liberal in conservative clothing. Conservatives aren’t fooled by that, and liberals aren’t going to vote for a part-time liberal when they have a very persuasive full-time liberal to vote for."
He adds:
"'The lesser of two evils' is not a governing philosophy. Yet Republicans repeatedly try to seduce conservatives with it. That strategy didn’t work in 1948, 1960, 1974, 1976, 1992 or 2006 — and it won’t work in 2008."
Perhaps Mr. Viguerie is right. America should move to a four-party as opposed to a two-party system. Two parties worked fine in an age of congruence, in the 19th century when the Republicans and Democrats mostly disagreed about who should get the spoils and whether tariffs should be reduced. The congruence continued through the first twenty years of the twentieth century, when Progressivism was adopted by both parties. By 1920 the public had tired of political change, and some of the Republicans became known as conservatives, which really just meant that they were a wee bit less radical than they had been a decade earlier under Republican Theodore Roosevelt, perhaps the most left-wing president of the twentieth century. In the 1930s Franklin D. Roosevelt identified the Democratic Party with social democracy. Although they fought social democracy, the Republicans never aimed to repudiate their earlier Progressivism nor did they aim to repudiate the New Deal. Rather, they became the "lesser of two evils" or the "wee bit less social democracy" party. The Republicans have never questioned the elements of Democratic Party social democracy. Rather, they have been content to argue for "a wee bit less". When elected, they have never attempted to repeal the most extreme Democratic policies. Warren G. Harding did not aim to repeal the Hepburn Act and Dwight Eisenhower did not aim to repeal the New Deal, even a bit of it.
Because there are two parties, there is a strong incentive for both candidates to locate as close to the center as possible. Those to the "right" of the Republican, i.e., those who are more libertarian on economics or conservative on social issues are forced to vote for the Republican unless the Republican goes so far to the left that the Democrat becomes more attractive. The Republicans go as far to the center as possible to attract the undecided voters. The conservatives and libertarians are forced to vote Republican even though the Republican's views are closer to social democratic than they would like. The reverse is true for the Democrat. The Democratic candidates are pushed as close to the "right", to the least radical position, as possible to attract the undecided. Thus, the Democratic candidate cannot seem as left wing or as social democratic as activist members would like.
This results in not, in my opinion, a move to the center. America has not arrived at a "centrist" solution. Rather, it has arrived at a liberal/free market conservative solution that has been radically modified by progressive/social democratic programs. This results in stability and much less change than would result in a four party system, but it also results in much less experimentation and competition. The result is a system that does not reward new ideas and that has foreclosed (a) the possibility of reductions in the extent of government as well as (b) the possibility of socialism. I am happy about (b), unhappy about (a), but the reverse is true for most Democrats. They would like to see a world where the crank ideas of the New York Times, William Ayers and Jimmy Carter are applied without restraint.
I do not think that Mr. Viguerie is right about the 2008 election. I do not think that Mr. Obama will win because he is too far to the left to attract centrists. His associations with Chicago radicals make clear Mr. Obama's left wing orientation. As a result, centrist voters will prefer McCain and McCain will win. McCain does not need to convince conservatives to vote for him. Rather, he needs to convince "centrists" to vote for him. Unless conservatives want Bill Ayers's and Reverend Wright's associate to run the country, they will have to support McCain. If they stay home or vote for Bob Barr, then we can welcome a new emphasis on extending centralized planning, intellectuals' planning projects and attacks on personal freedom.
While the Republicans' performance has been dismal, the way to change this is at the local level. The president is in many ways a symbol. An Obama victory will create a national mindset that America is turning to the left. A McCain victory will say that the nation has rejected left-wing ideology even if the Bush administration's and Republican Congress's performance has been dismal.
I live in Congressman Maurice Hinchey's political district. Mr. Hinchey made national news last week because he advocated price controls on gasoline. Mr. Hinchey has run unopposed for a number of elections. Tonight, I met a young man, a teacher from Binghamton, NY, who may run for Congress against Mr. Hinchey. The young man, George K. Phillips, is a conservative who has many good ideas. He is a political novice. I invite Mr. Viguerie to assist Mr. Phillips in his Congressional run. Rather than complain about McCain, let's think about how to assist Mr. Phillips and other conservatives like him at the local level.
As far as big ideas, perhaps it is time to think about a four-party system. But much ground work would need to be done before this idea has any practical political importance. A four-party system would better represent the ideological diversity that exists in America. It would lead to less stability but more experimentation.
Friday, June 6, 2008
Thursday, June 5, 2008
Fundraising Message from Susette Kelo (Yes, That Kelo)
My name is Susette Kelo. On Monday, June 23, 2008, I need your help in making a little bit of history.
June 23 is the third anniversary of the infamous Kelo eminent domain case, the U.S. Supreme Court decision that allowed perfectly well-maintained private homes like mine to be taken by the government and handed over for someone else’s private use. Under that ruling, any home could be taken and destroyed to make way for high-end condos. Any small business could be bulldozed to make way for a big box store. And, tragically, that is what is happening in too many parts of our country.
I’d like your help to put an end to that abuse of eminent domain once and for all.
Please go to www.ij.org/keloday today and pledge to give some small contribution to the Institute for Justice (IJ) on June 23. (Pledge today and we will email you on June 23 reminding you to donate on that day.)
IJ helped defend my home and my neighbors’ homes when they were threatened by eminent domain for private gain.
IJ continues to defend other homeowners and small property owners in similar fights.
One hundred percent of the money raised on this site (www.ij.org/keloday) on that day will be used to fight eminent domain abuse--the use of eminent domain for private development projects. We recognize that under the Constitution eminent domain can be used for genuine “public use” projects, such as for a courthouse or to build a highway, but when government power is used to take land from one private property owner only to hand that land over to another private person for their private profit, that is an abuse of government’s power.
Our goal is to earn 10,000 donations for IJ on that one day, Monday, June 23.
Leading up to the Kelo argument, the Institute for Justice documented that 10,000 American property owners had their property threatened or actually taken by eminent domain for private use in just a 5-year period. That 10,000 figure inspired IJ and me to seek 10,000 donations from across the country to send a message to those in power that we care about our homes and that the abuse of eminent domain must be stopped.
We are not seeking large contributions on this day: just $25, $50 or $100. Even a $5 contribution will make a difference and add greatly to the ambitious numbers we’re trying to achieve on that day.
And, if you feel strongly enough about this effort and would be willing to forward this to friends who will join us in the fight to end eminent domain abuse, that too would be greatly appreciated.
Together, we can convince policymakers that eminent domain abuse is un-American and must be stopped.
Thank you for your consideration,
Susette Kelo
June 23 is the third anniversary of the infamous Kelo eminent domain case, the U.S. Supreme Court decision that allowed perfectly well-maintained private homes like mine to be taken by the government and handed over for someone else’s private use. Under that ruling, any home could be taken and destroyed to make way for high-end condos. Any small business could be bulldozed to make way for a big box store. And, tragically, that is what is happening in too many parts of our country.
I’d like your help to put an end to that abuse of eminent domain once and for all.
Please go to www.ij.org/keloday today and pledge to give some small contribution to the Institute for Justice (IJ) on June 23. (Pledge today and we will email you on June 23 reminding you to donate on that day.)
IJ helped defend my home and my neighbors’ homes when they were threatened by eminent domain for private gain.
IJ continues to defend other homeowners and small property owners in similar fights.
One hundred percent of the money raised on this site (www.ij.org/keloday) on that day will be used to fight eminent domain abuse--the use of eminent domain for private development projects. We recognize that under the Constitution eminent domain can be used for genuine “public use” projects, such as for a courthouse or to build a highway, but when government power is used to take land from one private property owner only to hand that land over to another private person for their private profit, that is an abuse of government’s power.
Our goal is to earn 10,000 donations for IJ on that one day, Monday, June 23.
Leading up to the Kelo argument, the Institute for Justice documented that 10,000 American property owners had their property threatened or actually taken by eminent domain for private use in just a 5-year period. That 10,000 figure inspired IJ and me to seek 10,000 donations from across the country to send a message to those in power that we care about our homes and that the abuse of eminent domain must be stopped.
We are not seeking large contributions on this day: just $25, $50 or $100. Even a $5 contribution will make a difference and add greatly to the ambitious numbers we’re trying to achieve on that day.
And, if you feel strongly enough about this effort and would be willing to forward this to friends who will join us in the fight to end eminent domain abuse, that too would be greatly appreciated.
Together, we can convince policymakers that eminent domain abuse is un-American and must be stopped.
Thank you for your consideration,
Susette Kelo
Wednesday, June 4, 2008
Oskar Lange RIP: "On the Economic Theory of Socialism" in Benjamin Lippincott, Editor, On the Economic Theory of Socialism
Oskar Lange, "On the Economic Theory of Socialism". Reprinted in Benjamin E. Lippincott, editor, On the Economic Theory of Socialism Volume 2: Government Control of the Economic Order. Minneapolis, Minn.: University of Minnesota Press. 1948. Original article in Review of Economic Studies, Volume IV, Nos. 1 and 2, October 1936 and November 1937. Used copies available from Amazon.com starting at $1.34.
I've had this article on the back of my back burner for roughly 30 years and I was inspired to read it, first, by Professor Danthine my microeconomics professor at Columbia Business School who reminded me of it in 1986 and second by Nicolai Foss's blog that I blogged about two weeks ago.
This is the article in which Lange writes that a statue should be erected to Ludwig von Mises in the hall of the ministry of socialism for his arguments about the impossibility of price in a socialist economy. Lange claims that he has disproven von Mises's arguments based on elementary economics (the second section of the article is a review of microeconomic theory) but history has proven von Mises right and Lange wrong. The socialist economy of the Soviet Union fell because of the very kind of pricing inefficiency that von Mises identified. Hence, a statue might be erected to Lange in the hall of failed academic theories.
Lange's argument is elegant but there are several flaws that stand out and should have stood out even prior to the passage of the historical record.
First the part that Lange could not have known in advance. Lange overlooks the realities of bureaucratic and political decision making in organizations. He assumes that central planners are rational actors who will equilibrate marginal cost and price. History did not prove him right. Central planning was largely political, and political actors are influenced, as were the Soviet planners of Gosplan, by political considerations rather than considerations of pure rationality. Thus, the history of Soviet socialism is riddled with examples of price-setting on the basis of political concerns. For instance, bread was priced at a low level because the citizenry expected cheap bread. However, farmers had earlier supply-chain access to the bread than did retailers, and because the bread was set at a price that was cheaper than animal feed, they would purchase the bread from the distributers and feed it to their cattle while there were bread shortages in the cities. There were many examples of this type as Berliner's book Soviet Socialism from Stalin to Gorbachev illustrates.
Second and related to the first point, much of Lange's argument is based on the theory that economic planners will be able to reach optimal, market clearing prices through trial and error. He assumes away Hayek's argument that it is impossible to acquire the necessary information for the myriad products in an economy. However, Hayek was right. The trial and error process is too difficult to accomplish because product variations are too complex for planners to anticipate. No amount of theorizing about the possibility of equating marginal cost and price will change the transactions cost impediments to doing so.
Third, there were several points that should have stood out as far fetched even in the 1930s. Many of Lange's arguments make assumptions that have a tautological quality. That is, to prove pricing is possible he assumes that price information is available, and then deduces that pricing is possible because the information is available. His argument begins with a model in which socialist firms have the ability to determine price and production levels, but this is the very problem that impeded socialist central planning. Central planners want to determine price and production levels centrally and so cannot make use of imbalances between supply and demand in each region and firm. For instance, Lange writes (p. 71):
"If demand and supply are not equal for each commmodity, prices change again and we have another set of prices, which again serves as a basis for individual rearranging of choices."
But this assumes either local price determination or the ability of the central planning authority to flexibly change price. It is precisely the absence of such flexibility that caused socialist planning to fail. Trial and error are impossible because the information constraints are too severe and because the political and bureaucratic processes are too inflexible.
The tautological quality of Lange's argument is especially seen on page 75 where he writes that:
"The decisions of the managers of production are no longer guided by the aim of maximization of profit. Instead, certain rules are imposed on them by the Central Planning Board which aim at satisfying consumers' preferences in the best way possible."
But it is the absence of price that inhibits the Central Planning Board from figuring out consumers' preferences. The entire problem is that the central planners do not know consumer preferences. This is related to their inability to judge product quality because of transactions costs constraints. The complex and subtle art of quality management could not be done by a central planning board. Even competitive American firms have had trouble in this area.
Similarly, on page 76 Lange argues that the central planners can combine factors:
"in such proportion that the marginal productivity of that amount of each factor which is worth a unit of money is the same for all factors".
The problem, though, is that determination of productivity is not independent of understanding consumer demand. You cannot know the productivity of the factors unless you know whether customers view the outputs as desirable in comparison with competitive products.
Perhaps most importantly, Lange's model omits one of the key assumptions of perfect competition: ease of entry. Because there is no flexibility as to competition to the governmentally controlled firms, they can all reflect arbitrary or bureaucratic decision criteria and fail to evolve or experiment simply because consumers are forced to purchase their product, which, to put it politely, will be garbage.
It is entirely possible that the central planning board produces garbage and since there is no entry of entrepreneurial firms, there are no competitors to produce alternative products. As it turned out, this was the rule in the Soviet economy, a rule which Lange's argument simply assumes away. If all existing firms produce garbage and there is no ease of entry, then consumers are forced to choose among an array of undesirable products and prices can be set by the trial and error method that Lange outlines but they will be market clearing prices for garbage.
Lange also omits the importants of dynamic change. Without entrepreneurship there is no process for quality improvement. Hence, he outlines a static economy that can produce garbage where, if there are no transactions costs, firms can disobey the central planners at risk of their necks and experiment to find optimal prices.
Price and marginal productivity are then equilibrated, but customers remain unsatisfied. Nor could the firms that produce the garbage be closed because doing so would be too complicated politically. You would have to shut down the entire economy.
It is puzzling that Lange's argument had any influence in the first place. Now that history has proven him wrong, let us resell our copy of this book for $.85.
I've had this article on the back of my back burner for roughly 30 years and I was inspired to read it, first, by Professor Danthine my microeconomics professor at Columbia Business School who reminded me of it in 1986 and second by Nicolai Foss's blog that I blogged about two weeks ago.
This is the article in which Lange writes that a statue should be erected to Ludwig von Mises in the hall of the ministry of socialism for his arguments about the impossibility of price in a socialist economy. Lange claims that he has disproven von Mises's arguments based on elementary economics (the second section of the article is a review of microeconomic theory) but history has proven von Mises right and Lange wrong. The socialist economy of the Soviet Union fell because of the very kind of pricing inefficiency that von Mises identified. Hence, a statue might be erected to Lange in the hall of failed academic theories.
Lange's argument is elegant but there are several flaws that stand out and should have stood out even prior to the passage of the historical record.
First the part that Lange could not have known in advance. Lange overlooks the realities of bureaucratic and political decision making in organizations. He assumes that central planners are rational actors who will equilibrate marginal cost and price. History did not prove him right. Central planning was largely political, and political actors are influenced, as were the Soviet planners of Gosplan, by political considerations rather than considerations of pure rationality. Thus, the history of Soviet socialism is riddled with examples of price-setting on the basis of political concerns. For instance, bread was priced at a low level because the citizenry expected cheap bread. However, farmers had earlier supply-chain access to the bread than did retailers, and because the bread was set at a price that was cheaper than animal feed, they would purchase the bread from the distributers and feed it to their cattle while there were bread shortages in the cities. There were many examples of this type as Berliner's book Soviet Socialism from Stalin to Gorbachev illustrates.
Second and related to the first point, much of Lange's argument is based on the theory that economic planners will be able to reach optimal, market clearing prices through trial and error. He assumes away Hayek's argument that it is impossible to acquire the necessary information for the myriad products in an economy. However, Hayek was right. The trial and error process is too difficult to accomplish because product variations are too complex for planners to anticipate. No amount of theorizing about the possibility of equating marginal cost and price will change the transactions cost impediments to doing so.
Third, there were several points that should have stood out as far fetched even in the 1930s. Many of Lange's arguments make assumptions that have a tautological quality. That is, to prove pricing is possible he assumes that price information is available, and then deduces that pricing is possible because the information is available. His argument begins with a model in which socialist firms have the ability to determine price and production levels, but this is the very problem that impeded socialist central planning. Central planners want to determine price and production levels centrally and so cannot make use of imbalances between supply and demand in each region and firm. For instance, Lange writes (p. 71):
"If demand and supply are not equal for each commmodity, prices change again and we have another set of prices, which again serves as a basis for individual rearranging of choices."
But this assumes either local price determination or the ability of the central planning authority to flexibly change price. It is precisely the absence of such flexibility that caused socialist planning to fail. Trial and error are impossible because the information constraints are too severe and because the political and bureaucratic processes are too inflexible.
The tautological quality of Lange's argument is especially seen on page 75 where he writes that:
"The decisions of the managers of production are no longer guided by the aim of maximization of profit. Instead, certain rules are imposed on them by the Central Planning Board which aim at satisfying consumers' preferences in the best way possible."
But it is the absence of price that inhibits the Central Planning Board from figuring out consumers' preferences. The entire problem is that the central planners do not know consumer preferences. This is related to their inability to judge product quality because of transactions costs constraints. The complex and subtle art of quality management could not be done by a central planning board. Even competitive American firms have had trouble in this area.
Similarly, on page 76 Lange argues that the central planners can combine factors:
"in such proportion that the marginal productivity of that amount of each factor which is worth a unit of money is the same for all factors".
The problem, though, is that determination of productivity is not independent of understanding consumer demand. You cannot know the productivity of the factors unless you know whether customers view the outputs as desirable in comparison with competitive products.
Perhaps most importantly, Lange's model omits one of the key assumptions of perfect competition: ease of entry. Because there is no flexibility as to competition to the governmentally controlled firms, they can all reflect arbitrary or bureaucratic decision criteria and fail to evolve or experiment simply because consumers are forced to purchase their product, which, to put it politely, will be garbage.
It is entirely possible that the central planning board produces garbage and since there is no entry of entrepreneurial firms, there are no competitors to produce alternative products. As it turned out, this was the rule in the Soviet economy, a rule which Lange's argument simply assumes away. If all existing firms produce garbage and there is no ease of entry, then consumers are forced to choose among an array of undesirable products and prices can be set by the trial and error method that Lange outlines but they will be market clearing prices for garbage.
Lange also omits the importants of dynamic change. Without entrepreneurship there is no process for quality improvement. Hence, he outlines a static economy that can produce garbage where, if there are no transactions costs, firms can disobey the central planners at risk of their necks and experiment to find optimal prices.
Price and marginal productivity are then equilibrated, but customers remain unsatisfied. Nor could the firms that produce the garbage be closed because doing so would be too complicated politically. You would have to shut down the entire economy.
It is puzzling that Lange's argument had any influence in the first place. Now that history has proven him wrong, let us resell our copy of this book for $.85.
Tuesday, June 3, 2008
Media Deception About Inflation
About two years ago I veered from my focus on higher education into the subject of inflation. The reason is that, based on my recollection of the 1970s, when an inflation begins there is considerable media distortion about the reason. The cause of inflation is monetary. The reason for the media distortion is that inflation has two effects. One is to boost the stock market, the other is to boost consumer prices. The media has a vested interest in an increasing stock market, and so tends to lie about the reason. Inflation and the stock market are caused by monetary expansion.
Monetary expansion boosts the stock market for this reason. Interest is the price of money. The stock market computes future earnings with an implicit discount rate. By printing money, the Fed lowers the discount rate. Thus, when the Fed "reduces the interest rates" (prints money) it increases the stock market valuation.
Now, who benefits from the boost that monetary inflation gives to the stock market? The answer, of course, is corporate executives who hold stock options, Wall Street stock jobbers, asset holders in general, home owners and debtors. Who is harmed by inflation? People who work for a living, who are thrifty, who do not have debt and have to pay for necessities with the dollars that the Fed has devalued.
The largest debtors are big businesses. Media companies are corporate enterprises just like any other, and they hold debt. Therefore, their executives benefit from inflation. Therefore, there is considerable pressure on media outlets to lie about the reasons for inflation.
Not surprisingly, my concern about potential lying in the media have materialized recently in response to Congressional testimony by Michael Masters. First, on Fox Business News, there was a panel discussion that included much verbiage about how commodity speculators are causing inflation. Second, when I opened the New York Sun, Liz Peek's article "Time to Intervene in Commodities Markets" likewise omits the underlying monetary cause of price inflation. Price inflation is a monetary phenomenon, a fact that Fox as well as Peek omit. Instead, Peek, like Fox, attributes inflation to speculators. The media lying circus has begun.
Fox and the Sun are two of the few "Republican" sources, which is why I am loyal to them. It is a testimony to Wall Street's and corporate power that superstition is presented as news when the few "conservative" sources discuss inflation much like the New York Times.
As my good friend Howard S. Katz has put it, when reading about the economy, assume anything that the mass media says is the opposite of the truth. If the media says that high interest rates are hurting you, conclude that they are helping you. If the media says that there is a "sub-prime crisis", conclude that the bloated house prices that have been causing middle class bankruptcies for the past two decades are moderating. If the media says that inflation is caused by commodity speculation, assume that it is caused by monetary expansion. If the media says that a depression is near, assume that the stock market is about to go up.
Smart men have become rich in this way.
I have responded to Ms. Peek's and Fox's "news" pieces with the following letter:
>"Thanks for your article 'Time to Intervene in Commodities Markets'. I disagree with Mr. Masters's argument. Neither he nor anyone else is smart enough to know when to intervene in markets. The S&P 500 is up 1500% since January 1970. Is that a reason to cap stock prices? If not, then why is a 183% increase in commodity prices, 12.2% of the 38 year stock price increase, a reason to cap commodity prices? If pension funds wish to hold commodities as a hedge against inflation, should the federal government tell plan participants that they must suffer from inflation?
"Given that the global supply of dollars has increased by 8% a year for the past 2 1/2 decades and the Greenspan/Bernanke Fed have been on a money printing spree since 2000, why attribute rising commodity prices to speculation? Why not the money supply? Does Mr. Masters have a theory as to why printing money does not cause inflation? And is he a relative of Jimmy Carter?
"Perhaps a more useful story would be on the reason the M-3 monetary statistic is no longer published and what the growth in the quantity of M-3 has looked like since 1983. And might there be a connection between money supply and inflation? I mean, duh."
Monetary expansion boosts the stock market for this reason. Interest is the price of money. The stock market computes future earnings with an implicit discount rate. By printing money, the Fed lowers the discount rate. Thus, when the Fed "reduces the interest rates" (prints money) it increases the stock market valuation.
Now, who benefits from the boost that monetary inflation gives to the stock market? The answer, of course, is corporate executives who hold stock options, Wall Street stock jobbers, asset holders in general, home owners and debtors. Who is harmed by inflation? People who work for a living, who are thrifty, who do not have debt and have to pay for necessities with the dollars that the Fed has devalued.
The largest debtors are big businesses. Media companies are corporate enterprises just like any other, and they hold debt. Therefore, their executives benefit from inflation. Therefore, there is considerable pressure on media outlets to lie about the reasons for inflation.
Not surprisingly, my concern about potential lying in the media have materialized recently in response to Congressional testimony by Michael Masters. First, on Fox Business News, there was a panel discussion that included much verbiage about how commodity speculators are causing inflation. Second, when I opened the New York Sun, Liz Peek's article "Time to Intervene in Commodities Markets" likewise omits the underlying monetary cause of price inflation. Price inflation is a monetary phenomenon, a fact that Fox as well as Peek omit. Instead, Peek, like Fox, attributes inflation to speculators. The media lying circus has begun.
Fox and the Sun are two of the few "Republican" sources, which is why I am loyal to them. It is a testimony to Wall Street's and corporate power that superstition is presented as news when the few "conservative" sources discuss inflation much like the New York Times.
As my good friend Howard S. Katz has put it, when reading about the economy, assume anything that the mass media says is the opposite of the truth. If the media says that high interest rates are hurting you, conclude that they are helping you. If the media says that there is a "sub-prime crisis", conclude that the bloated house prices that have been causing middle class bankruptcies for the past two decades are moderating. If the media says that inflation is caused by commodity speculation, assume that it is caused by monetary expansion. If the media says that a depression is near, assume that the stock market is about to go up.
Smart men have become rich in this way.
I have responded to Ms. Peek's and Fox's "news" pieces with the following letter:
>"Thanks for your article 'Time to Intervene in Commodities Markets'. I disagree with Mr. Masters's argument. Neither he nor anyone else is smart enough to know when to intervene in markets. The S&P 500 is up 1500% since January 1970. Is that a reason to cap stock prices? If not, then why is a 183% increase in commodity prices, 12.2% of the 38 year stock price increase, a reason to cap commodity prices? If pension funds wish to hold commodities as a hedge against inflation, should the federal government tell plan participants that they must suffer from inflation?
"Given that the global supply of dollars has increased by 8% a year for the past 2 1/2 decades and the Greenspan/Bernanke Fed have been on a money printing spree since 2000, why attribute rising commodity prices to speculation? Why not the money supply? Does Mr. Masters have a theory as to why printing money does not cause inflation? And is he a relative of Jimmy Carter?
"Perhaps a more useful story would be on the reason the M-3 monetary statistic is no longer published and what the growth in the quantity of M-3 has looked like since 1983. And might there be a connection between money supply and inflation? I mean, duh."
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