Yahoo Finance writer Aaron Task told to carry water for the Fed, but instead writes an obfuscating apologia for inflationist institution.
Aaron Task over at Yahoo Finance thinks he pulled a big “gotcha” on all those anti-Fed cranks out there with his article, “No, the Fed Does NOT ‘Print Money’.” What’s that, Mr. Task? The Fed doesn’t print money? Aw shucks, and here at the Sound Money Project we’ve been criticizing the Fed for doing just that for several years now!
Mr. Task is correct, however, albeit in a technical, literal, hair-splitting way. Yes, the Federal Reserve does not own or operate the physical printing presses by which Federal Reserve Notes are produced. This dubious honor falls on the Bureau of Engraving and Printing (BEP), a branch of the US Treasury.
But if Task thinks he’s scored a coup in the monetary debate by picking this nit, boy is he mistaken. Task makes a common blunder of raising a distinction without a difference. While the Fed does not own or operate the printing presses, the Fed is still wholly in charge of the money printing process; the Fed “places the orders” for fresh bills, and the BEP merely acts a contractor on its behalf.
To his credit, Task does eventually get around to acknowledging that the Fed controls the money supply, and that there’s more to this magnitude than just Federal Reserve Notes. After providing a mini textbook-style treatment of the Fed’s monetary tools, he recommends you can learn more by consulting the Fed’s comic book on monetary policy! (The educational content is on a level with those cheesy 1950s sex-ed films: factual, but avoids the interesting parts [and bores you into *hopefully* never wanting to learn more – though just as in the former case, it’s exciting and rewarding when you do learn more! –admin.]).
But getting back to the gotcha headline. What if I invited you over for dinner, set you down at my table, locked the doors, and unleashed a hungry grizzly bear to shred you to pieces? Hey, I didn’t eat him, the bear did!* Right. Likewise, to say the Fed doesn’t print money would be like saying Donald Trump doesn’t build buildings, or George W. Bush didn’t invade Iraq. This is a smart-ass game. Yes, Trump hires construction companies to do the physical work, and Bush ordered the Army to do the actual shooting. But the building wouldn’t have been built, or the invasion launched, without the executive decision of the men at the top. Likewise with the Fed: those on the Federal Open Market Committee are the executives in charge of the US money supply. And, as we’ve stressed here at Sound Money Project on many occasions, their single greatest “tool,” and hence their singularly large threat to the US economy, is their ability to print money willy-nilly to finance ever-bigger bailouts and “stimulus” programs. To downplay this for the sake of cheap debating points is really irresponsible journalism.
Tyler Watts is an assistant professor of economics at Ball State University.
*of course, you were invited over “for dinner,” and it was never specified as “dinner for whom!” as Mr. Task would no doubt point out – admin.
[A final note: the top rated comment, with over 1600 “thumbs up” at this moment, reads: “NEWS FLASH; When people say that inflation “eats” up your money, it doesn’t mean that people pshysically eat their money. Just wanted to be clear about that.”
It also has over 60 replies, all favorable.
The next highest rated comment: “So was the point of the article that the Fed doesn’t physically print money, or that journalism is dead?” with almost 1200 “thumbs up,” and 36 replies. There is hope for us yet. – admin.]