web analytics
November 24, 2014 / 2 Kislev, 5775
At a Glance
Blogs
Sponsored Post
IDC Herzliya Campus A Day on Campus

To mark IDC Herzliya’s 20th anniversary, we spent a day following Prof. Uriel Reichman, IDC’s founder and president, and Jonathan Davis, VP for External Relations, around its delightful campus.



Enough with the Praise for Stanley Fischer and Israel’s Central Bank

There should be no central bank which regulates the supply of money.
Stanley Fischer

Stanley Fischer
Photo Credit: Yori Yanover, based on image by Miriam Alster/Flash90

Stanley Fischer is the head of the Bank of Israel. As such, he is the government appointed goon in charge of money printing. In his infinite wisdom, he is supposed to know exactly what the supply of money should be, because he’s purportedly a chacham she-ein kamohu – a crazy genius who has a pulsating brain and somehow knows these things. Or maybe God comes to him in his sleep and tells him how many shekels should exist and how much he should print and when.

Or maybe he’s just some guy who has no idea what he’s doing, given a power the equivalent of an economic nuclear weapon, something that no one man should ever, ever have.

Stan the Super Shekel Man recently came out with an announcement that he would be quitting his post early. Aside from the speculation as to why (I think it’s because he knows there will be an unstoppable economic tsunami in the next 3-5 years and he wants to duck out early and quit while he’s ahead), I have seen nothing but wall to wall praise for this central planning money printing soviet-style currency czar. Sure he’s kindly, has a sweet voice, an endearing Zambian accent, cutely mixes up male and female in his Hebrew grammar all the time, and the Israeli economy didn’t totally collapse in 2008 so everyone assumes the money master is responsible for saving us all from destitution. But this is all a big, sad, sorry myth.

Let’s break it down.

Let’s step aside for a moment from the persona of Stan the Man himself. He as a person is not the main problem. As I said, he’s a nice guy. The main problem is the very system of central banking that give men like him inordinate power over all of our economic lives, a power which, once you realize the scope and consequences of it, can make you dizzy.

Imagine for a moment two national economies. One where the supply of shoes and their price is controlled by one man and anybody else who manufactures or uses shoes besides him goes to jail, and another where the supply of shoes and their price is controlled by the free market, meaning a myriad of entrepreneurs freely importing and exporting shoes based on the demand for them by customers. In a free market where anyone can manufacture and buy as many or as few shoes as he wants, the supply, demand, and price of shoes will tend to reach an equilibrium point where profits will remain constant and steady. Shoe firms like wholesalers, manufactures, and retailers, will all compete with each other to sell the most shoes to the public. In order to do this, they will have to make shoes of the highest possible quality at the lowest possible prices in order to attract buyers.

If the supply of shoes gets too high, shoe prices will tend to fall, lowering profit margins, thereby restricting the amount of shoes manufactured, choking off supply, and bringing shoe prices back up to equilibrium. If demand gets too high, shoe prices will tend to rise, increasing profit margins, encouraging shoemakers to produce more in order to earn those increased profits. This brings supply back up to match demand, bringing prices back down to equilibrium again.

Now, in an economy where the supply of shoes and their price is controlled by one man, let’s call him the chairman of the Shoe Bank of Israel, we are entrusting a single person to:

  1. Manufacture every single shoe in the country, because anyone else who does that is considered a shoe counterfeiter and goes to prison
  2. Know automatically what the supply of shoes in the country should be at any given moment
  3. Set the price of shoes at whatever he thinks it should be
  4. Not abuse this power

The shoe market in such a country would be a complete mess and everyone who needs shoes would be miserable. Since only one firm would be allowed to make and sell shoes, there would be no competition and the quality of the shoes would deteriorate. If the Chairman of the Shoe Bank of Israel set the price of shoes too low, meaning he underestimates demand, people would start hoarding the shoes and buying more than they need, and there would be shoe shortages. If he sets the price of shoes too high, meaning overestimates demand, people who needed new shoes would not buy them, instead waiting for a lower price. Perhaps they would attempt to repair their old shoes, or cut open the ends if they didn’t fit. Huge surpluses of shoes would result.

About the Author: Rafi Farber blogs at SettlersofSamaria.org.


If you don't see your comment after publishing it, refresh the page.

Our comments section is intended for meaningful responses and debates in a civilized manner. We ask that you respect the fact that we are a religious Jewish website and avoid inappropriate language at all cost.

If you promote any foreign religions, gods or messiahs, lies about Israel, anti-Semitism, or advocate violence (except against terrorists), your permission to comment may be revoked.

4 Responses to “Enough with the Praise for Stanley Fischer and Israel’s Central Bank”

  1. Charlie Hall says:

    "maybe he’s just some guy who has no idea what he’s doing".

    It is this blogger who has no idea what he is doing. Using only precious metals for currency was a disaster worldwide, producing financial panic after financial panic, ruining the lives of millions each time. Winston Churchill later admitted that putting the UK back on the gold standard was one of his worst mistakes, as it helped to precipitate the Great Depression — which helped to precipitate the rise of the Nazis. And the ideas here are more extreme than any proponent of gold standards; he would eliminate government involvement completely and allow private interests — think George Soros — to make a killing by controlling the supply. Small countries in particular, such as Israel, would be at the mercy of such.

    Stanley Fischer justifiably gets a significant part of the credit for saving Israel from the consequences of the 2008 Crash, a crash caused largely by the removal of government involvement in financial regulation in most countries — but not Israel. Furthermore, the author shows his ignorance through this statement:

    " government controlled money to continually lose value".

    In fact the Shekel is worth more now than eight years ago when Fischer took over.

    Can't the *Jewish Press* do better?

  2. Charlie Hall says:

    "maybe he’s just some guy who has no idea what he’s doing".

    It is this blogger who has no idea what he is doing. Using only precious metals for currency was a disaster worldwide, producing financial panic after financial panic, ruining the lives of millions each time. Winston Churchill later admitted that putting the UK back on the gold standard was one of his worst mistakes, as it helped to precipitate the Great Depression — which helped to precipitate the rise of the Nazis. And the ideas here are more extreme than any proponent of gold standards; he would eliminate government involvement completely and allow private interests — think George Soros — to make a killing by controlling the supply. Small countries in particular, such as Israel, would be at the mercy of such.

    Stanley Fischer justifiably gets a significant part of the credit for saving Israel from the consequences of the 2008 Crash, a crash caused largely by the removal of government involvement in financial regulation in most countries — but not Israel. Furthermore, the author shows his ignorance through this statement:

    " government controlled money to continually lose value".

    In fact the Shekel is worth more now than eight years ago when Fischer took over.

    Can't the *Jewish Press* do better?

  3. Rafi Farber says:

    Charlie, you seem to attack most things I write. First, you should understand that I am a anarcho-capitalist libertarian. I do not believe in the right of States qua States to exist, so obviously they should not run the monetary system. Just to clear up you facts a bit, the biggest financial panics ever (great depression, great recession, the soon to be great economic explosion and collapse of all currencies) have all occurred under Federal Reserve Hashgacha, the epicenter of fiat money. Winston Churchill's mistake was not putting Britain back on the gold standard. It was putting Britain back on the gold standard at 4.86 per pound instead of 3.5 per pound in an attempt to deny that they had been inflating the pound. This meant they were back on a gold standard with more pounds than gold. As for George Soros, there is no man who hounds for fiat currency and inflation more than him. When the Fed prints garbage, he's the first one that gets it, because it all goes to Wall Street first.

  4. Rafi Farber says:

    And the Shekel is certainly not worth more now than 8 years ago by any stretch of the imagination. It is stronger relative to the dollar, which is weakening even faster, yes, but in terms of what one can buy with 100 shekels, the purchasing power in terms of actual goods and services continually erodes and will keep doing so as long as governments are in charge of printing them.

Comments are closed.

SocialTwist Tell-a-Friend

Current Top Story
France Jew in a French synagogue talks about rising anti-Semitism.
Israel to Ease Absorption, Employment for Immigrants from France
Latest Blogs Stories
Doug Goldstein

Today”s discussion: “The effects of current geopolitical situation around the world on investing.”

jerusalem_flag

According to PM Netanyahu, the bill would enshrine full equality under law to all Israeli citizens.

Funeral for Druze policeman Zidan Saif, slain in a gun battle Tuesday with the murderers of Jews praying in a Jerusalem synagogue.

Master Sergeant Zidan Saif (Zt”L) a Druze from the Galilee, was shot and killed saving Jewish lives.

President Ruby Rivlin

President Rivlin’s recent statements are only half right, and that’s why he’s completely wrong.

This is our song “Learn to Love;” May joy and light be restored to Jerusalem speedily in our days.

I have a dream…President Obama will go to that prison, Pardon Jonathan Pollard and set him free

The burden of proof that a person is against Israel but not anti-Semitic rests on that person.

Bibi’s promising a good battle, not a victory in the war; We need to WIN the war against terrorism!

For 1000s of years it was perfectly OK for Jews to pray on Herod’s Extension of the Temple Mount.

The focus on the “Occupation” since 1967 is yet another invention to justify hatred and murder.

It should be clear Israel’s existence is not the real issue; the issue is Islamic fundamentalism.

But I am not afraid.I know this is Jewish land, not because of UN/foreign gov’ts saying we can exist

A grassroots initiative of hundreds of Chareidim from Har Nof is underway to attend the funeral of Zidan Saif and to pay their respects to the fallen policeman and to the Druze community in the village of Yanuch-Jat in Northern Israel.

Discover the world of NY high society and its intrigue.

A Jew is no more exempt in this war by living in the US or UK than I am enlisted by living in Efrat

Officer Zidan Sayif saved lives in the Har Nof Massacre, but was shot in the head and is now fighting for his life.

More Articles from Rafi Farber
investing-in-gold_4548807_lrg

We would see a massive transfer of wealth away from the banks and the government and the stock market and real estate which will all crash and back to the wage earning middle class who would then be earning gold.

Ron-Paul

People, we are being hoodwinked. No matter what the government says, the government does not define marriage, nor can it.

The finance minister will be me and only me, and I will cut everyone’s budget by 100% and return all the money to the taxpayers who it was stolen from.

In an interview with Galei Yisrael radio station, Likud MK Moshe Feiglin hinted he has a secret plan to help free Jonathan Pollard.

All Feiglin really should say is that the gay community should do whatever it wants, raise its own money, and stop trying to legislate laws which cost money and force unwilling people to pay for something they don’t believe in.

There should be no central bank which regulates the supply of money.

Bibi wants the smallest Likud possible while still maintaining his PM seat.

There is nothing qualitatively different between a trillion dollar coin, and a one dollar bill.

Printed from: http://www.jewishpress.com/blogs/settlers-of-samaria/enough-with-the-praise-for-stanley-fischer-and-israels-central-bank/2013/02/03/

Scan this QR code to visit this page online: