On Funny Money (Yours and Mine) - Part 2

We moved into our new house last week. As soon as I find the box where I stashed Harvey & Eck, the Twelve Days will recommence. But thankfully, I didn't misplace the internet. So I can read words by astute people about important things. For example ...

Back on economics briefly, here are a couple of sentences out of this article from Ron Paul that each person who has a net worth (deficit) denominated in U.S. dollars should ponder. Congressman Paul is writing about the Federal Reserve fiat money system, offering sage observations about the dangers posed thereby.

1. [New Federal Reserve Chairman Ben] Bernanke's biggest challenge is the challenge of central banking itself: You can control some things, but not everything.
   
2. In the Fed's case, it can control the quantity of money or the quality of it, but not both at the same time.

(emphasis mine)

The emphasized clause in item 1 is true. As much of life as central banking, actually.

I actually think the second sentence is not true. The Federal Reserve Bank could control the quantity of money and the quality thereof if they held the quantity of money constant or had some kind of tangible value supporting the quantity of money in circulation.

But of course we are at polar extremes from that kind of discipline. So much so that people commenting on the situation and people passing along commentator's views on the situation overlook that fact.

See you folks in Chile in 2015! Or Singapore, I guess.

Photo credit: here (the Federal Reserve itself!)