Monday, October 22, 2012

Levy, Harkins Q3 Letter

In the middle of last month in response to desultory growth, Federal Reserve Chairman Benjamin Bernanke announced Quantitative Easing III, a program most notable for its claims to “unlimited” size.  By the calculation of Martin Feldstein in the Financial Times last week, “unlimited” might come to $1.5 trillion of new money created in three years.  To put such a sum in perspective, the Fed’s assets totaled all of $825 billion at the beginning of the financial crisis in late 2007.  America’s leading economic light, Professor Paul Krugman of Princeton, says that not only is there nothing alarming about this, but that those of us who express concern are like bullies who would scare small children around a campfire for our own amusement.  Inflation is dead, now and forever, says the twice a week New York Times Columnist.  His assertion will look odd to you if you have been in a grocery store lately, but it grows positively loopy if you’re currently paying for a Princeton undergraduate.  Nothing on that campus is going up at a 2% annual rate, least of all tuition.  Which might remind all of us how often in politics things look different if you are signing the front of the check or the back.