Treasury Secretary Paulson perpetuates Keynesian mythology.
Read Treasury’s Paulson Gets It Wrong on the Forbes Magazine website.
As I wrote in Fed in Denial (May 22, 2008):
The Federal Reserve Board doggedly sticks to its conclusion that the problem is what Chairman Bernanke calls a “worldwide glut of savings,” adamantly refusing to acknowledge that its own policy of excessive money supply expansion is the root of the distress.
All that money sloshing around the financial world and promoting the housing and SIV bubbles didn’t come from savings. How could it, when we are all spending more than we make, maxing out our credit cards and home equity credit lines?
The Fed remains locked into Keynesian economic doctrine, which prescribes the cure for every economic glitch as ever more government deficit spending, financed by an expanding money supply. The result is inflation, visible in loss of dollar purchasing power.
See also Ben Bernanke and the “Barbarous Relic."
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