Thursday, August 16, 2007

George Will On Bernanke's Minimalist Fed

Every improvident loan requires an improvident borrower to seek and accept it. Furthermore, when there is no penalty for folly -- such as getting a variable-rate mortgage that will be ruinous if the rate varies upward -- folly proliferates. To get a mortgage is usually to commit capitalism; it is to make an investment in the hope of gain. And if lenders know that whenever they go too far and require inexpensive money the Federal Reserve will provide it with low interest rates, then going too far will not really be going too far.

The Federal Reserve's proper mission is not to produce a particular rate of economic growth or unemployment, or to cure injuries -- least of all, self-inflicted ones -- to certain sectors of the economy. It is to preserve the currency as a store of value -- to contain inflation. The fact that inflation remains a worry is testimony to the fundamental soundness of the economy, in spite of turbulence in a small slice of one sector.

Happily, Chairman Ben Bernanke's Federal Reserve remains committed to minimal management, which is what government does best.

~George Will from his most recent column

Related Quotes:

"If you protect a man from folly, you'll soon have a nation of fools."
~William Penn

"If you make the world safe for idiots, you'll have a world of idiots."
~Author unknnown


Post a Comment

<< Home