Energy Crisis & Central Bankers

Dan proposes doubling the cost of a gallon of gasoline. This is close to the experience of the 1973 oil shock, and Dan concedes that his proposal would pass through and cause a general price level increase (as it has done every single time there has been a supply shock). Central bankers don't like this because they have no good choices. Here's why.

The dark blue thin lines are the original aggregate demand and supply curves (blue dot is today). The positive change in price levels is unknown, as Dan himself remains unclear on how much of an impact on CPI such a proposal would cause.

What is undisputed however is that every major supply shock in energy since the 1930s caused a jump in CPI (green line).

Central bankers then have three options. Either they can increase monetary supply which increases aggregate demand (red line), this though results in the same output at a higher price (red dot).

Or central bankers can decrease monetary supply which decreases aggregate demand (pink line), this though results in lower output at the same price (pink dot).

The third choice though is the one central bankers typically use, marginally less output for marginally more cost. This is stagflation (light blue zone).

The Worst Book Title in American History . . .

. . . is (OK, what is your guess?)
Hints:
Brings out the worst instincts in any society.
Implies contempt for children, and their children yet unborn.
Like the gates of hell, requires the abandonment of hope from all..
Defiles the sacrifices of the WWII generation, who thought they were securing for coming generations a greatness exceeding their own.
Condemns civilization's central value: that the greatest generation is always the next one.

Actually, NOPE!

Publius really gets this post all wrong. First, in his ever chary way, he loses Billmon's invective and effectively castrates the argument, destroying what little potency it had; which is essentially that Americans are lazy (great insight by the way). Then, Publius takes it a step farther and decides that despite Bush, "we - the American public- are equally to blame."

Thats just simply wrong. I could make the argument that who is to blame is John Kerry for laying back and letting the Swift Boats destroy the one asset he had as a campaigner: his war record. I could also make the argument that James Carville is to blame for not obliterating the GOP with one liners like: "I can look around this room and point my finger at a half dozen people to hold accountable for 9/11, but only of them is the President of the United States!" I could also make the argument that Donna Brazile failed to deliver the vaunted GOTV machine which everyone has had a hard-on about since 2000 (where it failed the first time). But I won't make those arguments.

Instead, what I'll say is this, you can't blame "we - the American public" for deciding to stay with the whore we brought to the dance when the only alternative is some equally skanky, dressed up harlot who hasn't even promised to put out! Now, if that makes "us - the American public" fat and lazy, thats one thing, but if that makes "us - the American public" responsible for the Iraq saga, well Mr. Publius thats where you and I part ways. Sort of like I said before, there are probably eight, nine, maybe twenty million people you can blame for the Iraq war, but only one of them is named George W. Bush.

Did Anyone Notice?

This Memorial Day the Senate recessed withOUT voting on the defense authorization bill. Steve Clemons gives details:

Senior Republican Congressional sources have informed The Washington Note that the funding of the Defense Department and the front-line needs of U.S. soldiers are being held back to hammer John Warner.

Let me see here, there are soldiers, marines, airmen, getting killed in Iraq and the White House is playing politics with the Defense budget? Are you kidding me? How much more burden can our boys over there take on for ol' W?