Centralized Planning

From the top of the Stoa tonight, I am musing about the FED and the centralized economic planning of the People's Republic of China. The FED, as everyone knows is the "a-political" body that is responsible for printing our money, determining monetary supply and policy, while ensuring that inflation does not get out of control. Private business invests what it wants and borrows what it wants. Certain behaviors are controlled or regulated by the interest rates that are set by the FED. In the PRC, central planning committees adjust and determine everything that the FED controls PLUS many, many other items, levers, and policies that the FED is not able to adjust.

After saying that, the Chinese are afraid that inflation is getting away from them. They knew last fall that they needed to reign in spending, loaning, and international loaning. However, internal politics, aims, and power building is hampering their planners. They know inflation is getting away from them but they seem to be standing there, waiting for the train to hit them while hoping that they can jump out of the way just in the nick of time.

Our FED tells us day after day that inflation is under control, that the monetary supply that they have been so reckless with is not a problem. They tell us that buying most of our national debt via quantitative easing is a valid tool that they know how to wield.

In my educated vocabulary the best phrase that I can come up with is, "what a load of crap".

The Chinese central bank has nearly omnipotent power to regulate and control. They write the rules and enforce the rules. They control monetary supply and policy. They control the amount of money that is lent internally, the amount of money that is loaned outside of the country, and they even control the actual value of their money (limited floating and all that).

Yet still, inflation is getting out of hand in China. Food prices are climbing faster over there then they are over here. They risk riots and still petty politics keep them from fighting the inflation that they know is hurting them.

The FED supposedly has all that under control without all of the "control" that the PRC has over its own economy.

Riiiiight. Be careful what you believe on TV or in the papers. Do your own research and data evaluation and then ask yourself what you believe in.

Musings completed, I will once again head back to my domicile to play with my Ipad2.

Live well.

--Zavost