Second Thots

It's fascinating to see a former member of cabinet in Canada's government extol the virtues of deflation and central bank restraint. In case you don't know what he's talking about, I'm pretty sure that Maxime Bernier is a pupil of the Austrian School of Economics, which holds central banks and their power to manipulate money supply as the main culprits in ongoing economic woes.

Indeed, it's quite shocking for me to see someone so closely tied to government so brazenly attacking the establishment's economic view of the world, which holds Keynes, central banks, inflation, and money supply manipulation in such high esteem. In case you don't think you know what these are, just take a look at what Western governments have done for the last couple of years in trying to deal with financial crisis. They have borrowed money to "stimulate" economies, printed money to lower interest rates and increase prices, and bailed companies out despite their own short-sighted foolishness.

The ruling Conservative party has a reputation for shutting down the independent thought of Members of Parliament. Yet here you have one of their better known MPs being as independent as it gets when it comes to the fundamentals of our economy. You see, when you get people to speak out of turn, they often say things that many people don't want to hear. That's kind of why their leaders want them to stay quiet. The media and other usual suspects will jump on them for being so crazy, you know!

For the record, the Austrian School is largely marginalized and without much institutionalized credibility. However, I have read some of their works, and am fascinated by their views, if not totally convinced. That central banks can continue to print money at a whim, and to increase prices endlessly, doesn't make a whole lot of sense to me. But people who know much more than I do about these things say that we need the flexibility and independence that central banks bring to otherwise chaotic economies. Until I know better, I guess I'll have to agree, and leave the independent musings to Mr. Bernier for the time-being.

(Note: The article I originally read was located here. It's been moved and edited somewhat, but not enough to change the thrust of the article, or my blog post.)