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I hope he qualified "deficits don't matter". I don't know much of anyone that thinks deficits don't matter.

I do know people that discriminate between short term deficits, long term deficits, deficits at low interest rates, deficits at high interest rates, deficits to finance reasonable policies, deficits to finance bad policies, deficits resulting from a drop in revenue, deficits resulting from an unwillingness to raise revenue, deficits that bond markets are concerned about, deficits that bond markets are unconcerned about, etc.

I know people that make those distinctions, but I don't know many people that think "deficits don't matter".

(a) + (b) = the legacy of Milton Friedman

In addition, the target inflation rate of how much "mild" inflation is not harmful is moving -- upwards.

Senior economists at the IMF (Blanchard, et. al.) and columnists in the "Financial Times" are now saying that for the stability of the global economy mild (price) inflation rates of 4 percent should now be considered the norm, rather than the lower 2 percent rate supposedly endorsed by institutions like the European Central Bank and the Federal Reserve.

You see, the monetary central planners need more elbow room with monetary and interest rate policy, to be able to manipulate the macro aggregates -- all for our economic good.

Never is it more necessary than now to remind people of Hayek's emphasis and warning of the social engineer's "pretense of knowledge" and Wilhelm Roepke's criticisms of the "hubris of the intellectual."

These were, of course, all updates on Adam Smith's warning in "The Wealth of Nations" that never is regulatory power more dangerous than in the hands of some "statesman" who actually believes he has the wisdom, knowledge and ability to plan the lives of others.

We are living in interesting times -- which is a famous Chinese curse.

Richard Ebeling

The price level has increased almost 22x since the founding of the Fed. That is about a 3.25% compound annual rate of increase, less than the proposed 4-percent rate.

I recommend Tom Sowell's new book, Intellectuals and Society. It is very much on the Pretense of Knowledge.

If I may, I would strongly second Jerry O'Driscoll's recommendation of Thomas Sowell's new book, "Intellectuals and Society."

He, once again, forcefully analyzes the motives, ideology and psychology of those who presume to know how to manage the lives or others. . .

And who are very willing and able to disregard logic and the commonsense of economic reasoning, and ignore the historical evidence of centuries of government mismanagement and political paternalism to advance their dreams of a social engineered tyranny.

If there was any justice in the intellectual world, Thomas Sowell would be awarded the Nobel Prize for his brilliant interdisciplinary studies on the connections between race, culture and economics around the globe.

Richard Ebeling

Do you have a link to Jerry O'Driscoll's review of Sowell's new book? I googled, checked his blog and couldn't find it.


Do you have a link to Jerry O'Driscoll's review of Sowell's new book?

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