Writes Robert Anderson: "The economic cranks are still alive and well as demonstrated in April 6's WSJ editorial entitled, 'The New Inflation Equation,' written by the president and chief economist of the Dallas FRB. They take the mainstream Equation of Exchange to task as no longer adequate to explain inflation due to globalization, as though this flawed Keynesian 'mechanism' ever did explain the interventionist inflation phenomeon! The economic ignorance reflected in their essay is frightening, but it's what they chose to ignore which I found most incredible. Not a word is mentioned about the demand for dollars outside our domestic economy where the dollar is used as a medium of exchange, nor the ominous growth in dollar denominated debt instruments held by foreign central banks and foreign investors. Do you suppose they have programed their computer model software to reflect the impact on our domestic inflation (ie, their definition of rising prices) when foreigners finally decide to shift their massive dollar holdings from today's monetary debt instruments to goods of a non-monetary nature? When this process begins the explosion in their 'relatively constant velocity' would provide them, and everyone else, with an additional education in economic reality. It's times like this when we really miss Rothbard's pen attacking such flawed 'new economic' rhetoric."
