http://reason.com via Instapundit
Update:
Clarification: I have to clarify that the link above is not what I'm writing about below. Read both and compare in order to get the point. I apologize for any confusion.
Actually, this video shows another theory as to why Iceland has done better than the rest of Europe. That theory is that central bankers should not control monetary policy, but that the government should. Plus, that there should be no leverage in the banking system--- that is, no fractional reserve policy. Iceland may be following that prescription.
Milton Friedman's theory was to increase the money supply on a regular basis--- in conformance with a long term average of 3% economic growth in the United States. How you do this under our current system is by increasing debt. As I wrote earlier, much of this debt has no real significance--- it is simply going from one pocket of the government to the other.
It may be better to get rid of all leverage, but that can't be done now. But to get rid of debt may not be such a hot idea. It simply would be too tempting for the government to load up on spending just by printing greenbacks. I think debt keeps some discipline in the system. But it does give you some pause in criticizing monetary stimulus. Yet, I haven't been that critical of monetary stimulus, but there ought to be some reason behind the spending aside from pure politics. The spending should encourage desirable goals, which I have stated over and over again as the mastery of energy and space. These could be the new growth drivers for the future prosperity of the nation.
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