Printed on: September 25, 2013
Received Sept. 15
Recently in his column, "Sound and spurious," Don Herbst, like his idol Paul Krugman, tucks inconvenient facts in deep corners.
He loves the Reagan "deregulator" narrative, conveniently forgetting that a Democratic Congress passed the Depository Institutions Deregulation and Monetary Control Act, signed by President Carter. Government at the time was looking to stave off skyrocketing unemployment and soaring inflation. All caused by President Reagan, right Herbst/Krugman! The reality is Reagan merely carried on failed interventionist policies started by Carter and Democrats.
Herbst/Krugman love the narrative that austerity is causing all the pain in Europe, conveniently leaving out the interventions of government and exploding public debt leading up to the crisis. They focus solely on public debt as a percentage of GDP. Government under European austerity continues to grow. Spending has increased every year since 2007, except for 2011 where it remained constant.
Herbst speaks about recessions being "twice as severe" under a gold standard, predictably blaming the gold standard for the Great Depression and the reason that recessions were "more frequent." The mission of the Fed is to create financial and economic stability. The Fed was around for 15 years before the Great Depression. All major financial crisis we have faced have been under the federal reserve system. Any honest look at economic volatility and gold reveals more stability in the 150 years preceding the Fed.
I challenge Herbst to be intellectually honest. Not regurgitating Krugman narratives would help. (Word count: 240)