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Comment by blergh | Hacker News Reader

I like Zed, but this is full of bullshit. Every economist worth the name (fuck that Krugman/keynesian bullshit, read some Tyler Cowen, Peter Boettke, Steve Horwitz) knows that the Fed is to blame for the current episode of the business cycle. They printed too much money, it causes inflation and, even worse, disastrous malinvestments. In short: printing money fucks up the structure of production.

Moreover, the Fed isn't even a libertarian institution. He tries to discredit libertarianism by proclaiming that an airhead like Greenspan is a libertarian. He's not. He might once have said he was one, his actions have proven otherwise. The Fed is a government monopoly on money. And that's a bad thing.

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> fuck that Krugman/keynesian bullshit, read some Tyler Cowen

Well, there's a clear, cogent, and knowledgeable rebuttal of his points. Even for someone such as myself who is not a libertarian, Shaw's arguments are weak, and yet the best you could do is sling around a bunch of four letter words?

By the way, I do read Tyler Cowen, who is, by the way, much better at elucidating his point of view without resorting to profanity, and most likely has a lot more respect for smart people like Krugman and Keynes, even where he disagrees, and he is certainly not pinning blame on "The Fed":

http://www.marginalrevolution.com/marginalrevolution/2008/10...

Usually I agree with you on profanity. But in this case, I think its irony (in light of Zed's recent history) is amusing and actually has a point. In fact I the thought of writing a profanity-laced blog post as a rebuttal to this article actually crossed my mind.

Yes, usually I find Zed to be better able to back what he is saying. I don't know what happened this time.

The Fed doesn't print money. It does affect the size of the money supply, but it does this with interest rates, securities, and the reserve rate (or can do this). The reserve rate is generally not touched (it causes shocks in the money supply). The last two generally affect lending and saving rather heavily (make the interest rate high enough, it's not worth it to invest; low enough, not worth it to save).

The fact that the dollar is fiat has little to do with the problems we ran into (printed money is only a tiny fraction of the money supply).

"Printing money" is only a euphemism for "expanding the money supply." I thought that would be obvious. I know the Fed doesn't actually print the currency or mint coins.

But printing money and expanding the money supply have different effects on the economy. Printing money necessarily causes inflation; expanding the money supply does not ( it depends on where AD and AS are relative to each other).

I suppose a counter-argument to this is that the Fed has been coerced into doing this because the people who run it are best chums (or motivated in other ways) with the banks and lending houses that allowed this problem to spiral out of control.

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