Jenny Beth Martin asks Lawrence W. Reed the simplest question in economics, what is inflation, and his answer is that the definition decides who gets blamed.
If inflation means rising prices, Reed says, it is a short step to blaming the businesses that raise them: the grocery clerk who changed the sticker, the oil sheikhs, or, in Jimmy Carter's day, your credit cards. But if inflation means an increase in the quantity of money beyond any increase in the demand for it, you have to ask who does that. If you or I tried it, we would be arrested for counterfeiting. The quantity of money is something the government has put itself in charge of, which is why it wants you to believe that inflation is rising prices.
Then the line the episode is named for. Jack Kemp used to say that wet streets don't cause rain. Rain is the cause; wet streets are the outcome. First comes the increase in the money supply, then rising prices. Jenny Beth Martin takes it to the affordability debate: high prices are a real problem, and they are the result of bad monetary policy and government overspending. If the people decrying affordability were serious, Reed adds, they would be denouncing Congress for spending and the Federal Reserve for monetizing it. Instead, many of the same people are pushing massive new spending programs, offering more of the disease as the cure.
This is part three of a four part economics series with Lawrence W. Reed, president emeritus of the Foundation for Economic Education.
Watch the full episode and the rest of the series at jennybethshow.com. Learn more about Tea Party Patriots Action at teapartypatriots.org. To tell your senators and representative to stop spending, call the Capitol switchboard at 202-224-3121.
00:00 — The Connection Between Printing Money and Inflation
00:27 — Change the Definition, Change the Responsibility
00:53 — The Grocer, the Oil Sheikhs and Your Credit Cards
01:03 — Inflation Is an Increase in the Quantity of Money
01:20 — If You and I Tried It, We Would Be Arrested for Counterfeiting
01:55 — Jack Kemp: Wet Streets Don't Cause Rain
02:31 — Affordability Is the Symptom, Not the Cause
03:00 — Why the Affordability Crowd Will Not Denounce Spending
03:24 — More of the Problem Offered as the Cure
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