I've never argued for central planning, or continued intervention. You are worse than a politician with your lies. Liars make me sick. I love debating different points of view, but it's impossible to have a reasonable debate with someone who lies and makes up facts. Please stick to discussions where you add value. Namely, the Chit Chat forum.
You sure are definitive with your personal opinions. You say MOST of the distortions are a direct result of central bank intervention. Which market distortions are a result of central bank intervention, and which market distortions are not? How do you define a market distortion?
You must be too dumb to realize that ALL YOU EVER DO is argue in favor of continued intervention. What else would you call your incessant arguments in favor of "fighting deflation". Have you no shame?
Arguing the negative aspects of deflation is a far cry from arguing in favor of continued intervention. Those who know me, know I'm in favor of small government. Have you no brain?
I really don't know. I do know this however: The Fed does not want deflation. I think most can agree that in a debtor nation such as the U.S. where there is extensive public and private debt, deflation would have the effect of increasing the cost of borrowing retroactively, as dollars paid on debts would have more purchasing power than the dollars borrowed. From a debtors point of view that is a very bad thing, particularly if the public debt is held by other nations. It seems the intention is to inflate away as much debt as possible, as mentioned by Bob111, I think. Bernanke and the Fed are reacting to a difficult situation caused by a combination of bad government policy, deficit spending, and a former Fed Chairman who, while he was the chief regulator, did not believe in regulation. Greenspan's idea that the market would take care of excesses without intervention and without major upheaval has been thoroughly discredited. The jury is still out on Bernanke, but so far I find him a breath of fresh air after Greenspan's mumbo jumbo. Mary Shapiro seems to be at least trying to move the SEC in the right direction, and also seems to be a considerable improvement over Cox, who also, in retrospect, seemed to be asleep at the switch. I don't understand those that don't want an independent central bank. And it baffles me when they extole what they believe are the virtues of a market controlled economy without direction or interference from the central bank. Under Chairman Greenspan we had a Central Bank that provided excessive liquidity for too long, and total non-interference with the market, and look what that led to! Greenspan ignored all of the many warnings he was repeatedly given regarding excesses and laxness in mortgage. And when he was asked about raising the margin requirement he opined that that would be ineffective in cooling the market. Later event proved him to be entirely wrong -- as one of the important contributing factors to the meltdown was excessive leverage. I won't be surprised if Greenspan is not remembered in history as one of the very worst Fed Chairman.
Ok, I'll change it to ALL, if that makes you happy. The reason I said most is because it's not entirely clear where to draw the line between the decision speculators make based upon the implied moral hazard. i.e. we've been operating under this implied moral hazard for so many years now that we've forgotten how a more natural free market would function. Each and every time we have some sort of cataclysmic event in the market, the response is always more "regulation" and more intervention. The problem is that these responses only further ensure that the unnatural cycle of boom and bust is repeated. This isn't some fresh idea, it's really commonly accepted in many circles. Take housing as a for instance. When did prices really take off? 2002-03? The Fed lowered the cost of borrowing, eased lending standards as a result of the tech crash. Why did we have a tech bubble and crash to begin with? Why did LTCM take on such enormous risk across many counter-parties? Why did the counter parties concurrently assume that much risk? It's long chain of events, but at the heart of it is the implied rationale that bailouts are ensured if there is a threat of financial insolvency. You can only create a real threat if you concentrate the risk so acutely that there is no other alternative, hence you have to consolidate the industry into a few TBTF's. Really, it's alot of common sense and sure there is more to it than what I've written above.
How can you seriously not comprehend your own contradictions? And you ask if I have no brain. LOL Deflation is the natural chain of events following a Fed induced credit bubble. So the artificial reflation needed to create inflation is completely at odds with your "I'm in favor of small government". A smaller government = less spending, less bureaucracy and yes, deflation. Get a clue already.
Yes, so you're saying that in a theoretical, fully deregulated mkt that is completely free of all govt intervention (that includes taxes, tariffs, exchange rate controls, etc), the mkt is always right. To be sure, barter won't necessarily be fully free, according to your definition, and neither will E-Bay auctions. I have two issues with this: 1) the mkt you describe is a theoretical construct that doesn't exist in reality; this is the case even if you remove your central bank, as long as your trading partner can screw with the exchange rate; 2) bubbles and other such distortions have been shown to occur naturally, under "laboratory conditions", which would suggest that even free mkts aren't always right.