Monetarism, Abenomics, QE, and Minimum Wage Proposals: One Bad Idea Leads to Another, and Another – Mike Shedlock

via Monetarism, Abenomics, QE, and Minimum Wage Proposals: One Bad Idea Leads to Another, and Another – Mike Shedlock.

Brief History: 

Monetarists act on the theory falling prices are a bad idea

The Fed prints money and holds rates too low

Housing bubble builds

Medical and education prices soar

Student loans soar to “help” the students

Because housing is not affordable numerous affordable housing programs appear causing still more unwarranted housing demand. Few see the bubble because housing is not in the CPI

Housing crashes

The affordable housing advocates are abhorred by falling prices

Fed bails out banks and steps in to support housing prices

Income inequality soars

Students remain stuck with debt

Because of one idiotic notion, that “falling prices are a bad thing”, the Fed has generally managed to keep the CPI rising, with some things going up much faster than others.

In response to uneven price inflation, we have seen numerous “affordable housing” programs, massive student aid programs, bank bailouts at taxpayer expense, Obamacare to make medical insurance affordable, cash for clunkers, Abenomics in Japan, and countless other economic idiocies.

People propose bad idea after bad idea simply to fix problems caused by the previous bad idea. This is corollary six to the Law of Bad Ideas.

Law of Bad Ideas Corollary Six: Bad ideas lead to more bad ideas to fix problems caused by previous bad ideas.

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