By James Kwak
In a Congressional hearing today, Representative Paul Ryan (R-WI), chair of the House Budget Committee, strongly criticized Federal Reserve Chair Ben Bernanke for failing to contain the severe inflation threat posed by the Tooth Fairy.
Ryan pointed to numerous studies showing that, despite ongoing economic sluggishness, the Tooth Fairy is paying much more for children’s baby teeth than in past years. In neighborhoods such as Winnetka, Cleveland Park, the Upper East Side, and Palo Alto, children can receive more than $20 per tooth — a dramatic increase from the 25-50 cents that the Tooth Fairy paid only a decade or two ago. In the Hamptons, summertime prices for teeth can easily exceed $100, according to a survey commissioned by the American Enterprise Institute.* Because the Tooth Fairy is able to create money magically, her purchases of unused teeth (with no apparent economic value**) increase the money supply, fueling inflation. Without explicitly accusing Bernanke of participation in the Tooth Fairy’s scheme, Ryan implied that the Tooth Fairy’s higher payouts may be part of the Federal Reserve’s quantitative easing scheme.
Ryan pointed to Tooth Fairy-driven inflation as part of “a sharp rise in a variety of key global commodity and basic material prices” that, he said, threaten to produce higher overall inflation and reduce the value of the dollar. “The inflation dynamic can be quick to materialize and painful to eradicate once it takes hold,” said Ryan, calling on Bernanke to end the quantitative easing program and raise interest rates in order to counteract the expansionary policies of the Tooth Fairy.
Bernanke responded, “On the inflation front, we have recently seen increases in some highly visible prices, notably for children’s teeth. . . . Nonetheless, overall inflation is still quite low and longer-term inflation expectations have remained stable.” He pointed out that all measures of domestic inflation — the prices that real Americans pay for the real stuff that they actually buy — are at historic lows: core inflation of 0.7 percent in 2010, the price index for personal consumption expenditures at 1.2 percent, and average hourly earnings at 1.7 percent. He also pointed out that inflation in emerging markets is higher because those economies are growing faster and that commodity prices are always volatile. But Ryan insisted that the Fed take aggressive action against the Tooth Fairy because an unemployment level of 9 percent would fail to contain the inflationary spiral that would inevitably result from this particularly sinister form of monetary expansion, taking place quietly, in the dark, in our children’s own bedrooms.
“There is nothing more insidious that a country can do to its citizens than debase its currency,” he said, apparently forgetting for a moment that he has proposed replacing Medicare with a voucher system whose benefits are explicitly designed to grow slower than the rate of health care cost inflation.*** Ryan also apparently believes that a more valuable currency is always better than a less valuable currency, which is crazier than a kid believing in the Tooth Fairy. After all, if you’re six years old and the tooth under your pillow gets replaced by money and a note from the Tooth Fairy, then that’s physical evidence in favor of her existence. Paul Ryan seems to believe that China (like Korea, Taiwan, Germany, and France before it) is hurting its economy by keeping the value of its currency low in order to promote exports and create jobs. This fetishization of the dollar’s exchange rate is even crazier than the typical fetish, which at least attaches to some object. Paul Ryan’s fetish attaches to an abstract ratio and elevates it to moralistic terms.
* In inner-city Detroit, however, survey respondents gave answers such as, “No Tooth Fairy comes around here. Haven’t you seen nobody has a job anymore?” The AEI report concluded that the Tooth Fairy must value teeth from the Upper East Side more than teeth from Detroit.
** See the introduction to a This American Life episode for some children’s theories about what the Tooth Fairy does with all those teeth.
*** The growth rate of benefits is capped at GDP plus one percentage point. Historically health care costs have grown significantly faster. More to the point, the whole point of the Ryan-Rivlin plan is to force Medicare to grow more slowly than health care costs overall; if health care cost growth is GDP plus one percentage point or less, then converting Medicare to a voucher system provides no fiscal benefits.
23 thoughts on “Paul Ryan Criticizes Bernanke for Failing to Contain Tooth Fairy”
The printing will continue until morale improves.
“Because the Tooth Fairy is able to create money magically”
Well there are those rumors that while serving in the Pacific war, TF used his K-bar knife to pry out gold teeth from the enemy dead. Only rumors, of course, never substantiated.
That Paul Ryan is not systematically denounced for the complete joke he is, is one of those mysteries so peculiar to American politics.
Sorry, but inflation controls are a day late and a dollar short. The genie is alredy out of the bottle.
re: “core” inflation numbers by Helicopter Ben…who are you going to believe, you’re lyin eyes, or a serial prevaricator?
Agreed. He is my Rep (yuck) and I cannot believe he keeps getting re-elected. Especially after the last few years when his ignorant rantings have been a leading voice nationally for the GOP. Too many people in this district still think the modern GOP is their Grandpa’s GOP and keeps voting for them.
James, April 1 is still 7 weeks away. You should save your best material!
Or is there an opening at The Onion I haven’t heard about?
I don’t know how you can think China ISN’T hurting its economy by debasing it’s currency. Yes, inflating the currency allows them to export more. But only because they’re stealing purchasing power from the hands of the Chinese, and giving it to the Americans. It’s no more rational to demand all American manufacturers lower their prices 20%, than it is to lower their prices 20% to the rest of the world through inflation to create “jerbs.”
No one can deny that China is stealing from its domestic consumers/workers to give to investors/foreign consumers.
But you don’t appear to notice that every day China magically seems to have more rich domestic consumers/workers that it is worth stealing from. Complete and bizarre coincidence, no?
Scary thing is Ryan seems to be smarter than the other tea partiers.
Ryan, of course, bothers me a lot. That said, however, the backer of the Tooth Fairy, Bernanke, scares me more. He smugly touts his “last tool in the box,” QEII as the “way out” of our malaise. Gee, Ben, why then are you pumping all that cash directly into the coffers of those massive banks that are now, and heve been robbing us blind by rigging their economy while destroying ours?
James, Bernanke is complicit in a wonderful heads I win, tails you lose, central banking scheme to gradually diminish potential Congressional OR Administration control over our economy. We all know and can see that our present economic trajectory is unsustainable. Bernanke’s analysis is spot on as to identifying the disease, but the cure is a tonic which is more likely to weaken (and possibly ultimately kill) the patient. Liken our malaise to cancer, and QEII like the overapplication of chemotherapy and radiation which allows other conditions to destroy what’s left after treatment.
Bernanke is a leader of the globalists, and the hearings today were pure hand-ringing Kabuki theater, played out for ours and the world’s entertainment and the edification provided is pure misdirection. Until the cancer (banksters) are excised from our system, and the corporate globalists are reined in, it will continue to be a massive field day for the top economic tier, and continue to erode the fabric of our democracy.
As I said before, if you adopt a system like the one proposed here, with a strong potential of making health care increasingly less affordable for a certain group, you have to consider the possiblity that it will turn into “unaffordable” for a growing number of individuals. That would not be a problem:
– If one knew that the supply response will be more budget forms of health care (after all the US tends to be twice as expensive as Canada, where life expectancy is higher). That would of course be a very desirable outcome.
Or, and that would be a problem for moral conservatives (I would guess a core constituency of mr Ryan and his friends))
– a specific class of vouchers (to be exchanged for one’s remaining stock of vouchers) should be available for those who cannot pay, are too weak to steal and just want to go with dignity, thus saving maybe enough to keep the healthier and/or wealthier under care without making care significantly less expensive or prevailing. This would of course also require suitable environments for “going with dignity”
I wonder what mr Ryan will be proposing to ease the financial burden of excessive incarceration in the US. Interesting: libertarianism and conservatism lead to different policy choices…
Do not look a gift horse in the mouth
I totally agree, I have been saying for quite some time now that hyperinfation will come home to roost in so many fashions.
Woke up on the wrong side of the bed today I see. from your statement it would seem the chinese are stealing from the hands of themselves. Those greedy ______.
And I respectfully agree, and ask the question again, Just what would they do if the genie does strike it rich? Would Uncle Sam and Ben both agree to let the genie do its own taxes, and forever hold their peace. (and mind?) Or hastly aboish the fed so that the genie and perhaps others can see what is what?
I have some unregisterable collector guns to mark the occasion and start the ball a rollin. But the timer is in the hands of the great unknown. And I gave up addressing your concerns long ago, sorry bout that.
And yet Ryan failed to see and point out …
Uncle Ben exposed his genius again by claiming that the only problem with Congress’ move to prioritize the debt payment would be a computer problem. Does he not understand that once prioritization occurs for one class of US creditors it can happen to other classes at the will of Congress?
Now why would anyone buy treasuries and risk being included in the class that is paid last or not paid at all? Will this scheme also filter down to the states? Which class is next?
Watch out China your treasuries could be next. And then maybe the treasuries that Uncle Be holds
It is well-known that the teeth are harvested from the middle class in exchange for near-worthless fiat coins, and then ground up and served with champagne and caviar for $2,000 a plate at restaurants in the Hamptons, Caymans, and Monaco.
It’s true. Google it.
Word on the street has it that Bernanke is going to revert to simple and straightforward RICO-style property seizures in order to put us on a more sound financial footing. The efficacy with which this very strategy was used by Ethan Allen and other Vermont politicians in the crucial early years of the carving of Vermont from the territory of New York has been noted as barbaric by some historians, but one modern GOP luminary was heard to quip: “Barbaric times call for barbaric actinos.”
All currency seized will be burned, thus reducing the money supply and offsetting the pernicious and inflationary trending potential associated with quantitative easing.
In other areas, a return to earlier and previously discredited health care practices is being considered in committee up on the hill. Medi-Let is the latest fad that will be resurrected, wherein ailing citizens will undergo blood-letting at the same time as co-pay-driving account-letting. The administrative arm of this new entity will ultimately be privatized in order to keep the government hands off of this important government program, and 99% of tea partiers support this division of power. Although the acronym for this important program has yet to be determined with any high degree of certainty, the Medi-Let moniker is anticipated to be Life Ending Enabled Comprehensive Healthcare (LEECH).
I would encourage all of those that post here, and for that matter anybody making less than $400k per annum to consider emigration to more safe environs such as Ireland, or Latvia.
The criminalization of the ivory trade has created an important vacuum that is filled very nicely with children’s teeth. Thank God for supply and demand.
Representative Ryan’s suspicions of the Tooth Fairy’s participation in QE2 are actually well founded. I have it on good authority that Rachel’s Dad (Ronnie Loeberfeld, aka the Tooth Fairy) has been spotted going in and out of the NY Fed ever since Bernanke’s Jackson Hole speech. His ability to magically to make money out of thin air has saved the Fed a great deal of time and trouble.
Of course you’ve been saying that, Herbert. But you are a nut job.
I can actually remember when the tooth fairy gave me a quarter for every tooth that fell out. Now all my teeth are falling out and I can’t get a damn thing for them. Is that inflation or deflation? Go figure.
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