Sumner Attacks Krugman, Spain Gets Downgraded, and Gary North's End the Fed Bill

Scott Sumner of TheMoneyIllusion has a great blog post today entitled "Paul Krugman: Ignorant and Proud of it" where he basically points out what we all know about Princeton's very own.  In response to this earlier Krugman post:

Some have asked if there aren’t conservative sites I read regularly. Well, no. I will read anything I’ve been informed about that’s either interesting or revealing; but I don’t know of any economics or politics sites on that side that regularly provide analysis or information I need to take seriously.

Sumner pounces:

I’m always amazed when someone so brilliant can be so clueless about life.  How someone can reach middle age and still live in a kindergartener’s world of good guys and bad guys.

I can't think of a more apt analogy.  Interestingly enough, I just got Krugman's Pop Internationalism in the mail today.  From what I hear, 90's Krugman actually makes sense.  I will be the judge of that but from reading the introduction, the critics might be right.

Speaking of European worshipers, Moody's downgraded Spain's bond rating today:

Spain’s credit rating was cut to Aa2 by Moody’s Investors Service, which said the cost of shoring up the banking industry will eclipse government estimates. The euro fell and Spanish bond yields rose.

Spain will spend as much as 50 billion euros ($69 billion) shoring up savings banks, Moody’s forecast, more than double the 20 billion-euro price set by the government. The risks to government finances remain “skewed to the downside,” the company said in a statement today. The outlook is “negative,” suggesting more rating cuts are under consideration.

It's only a matter of time before things get worse over there.  Not to worry though, as our very own Federal Reserve is scheduled to monetize $102 billion in Treasury purchases next month:

 Inflating our way to prosperity huh?  Try helping out the big banks yet again:

  A months-long investigation into abusive mortgage practices by the Federal Reserve found no wrongful foreclosures, members of the Fed's Consumer Advisory Council said Thursday.

No wrongful foreclosures?  I guess robo-signing is okay as long as the Fed and Congress are there to bail you out when things get hairy.  I always figured that getting rid of the Fed through legislation would be incredibly complex.  Gary North proves me wrong though with a bill that has some pretty straightforward language:

Ron Paul could introduce a bill to end the Federal Reserve System. He could call it: "The Monetary Liberty Act." It would get known as the "End the Fed Act." Here is what the text might say.

The Federal Reserve Act of 1913 is hereby repealed. So are all subsequent acts based on the Federal Reserve Act of 1913.
All authority of the Federal Reserve System to act in the name of the United States government is hereby revoked.
The assets of the Board of Governors of the Federal Reserve System, which are already the property of the United States Government, are hereby transferred to the Department of the Treasury. This includes all of the assets listed on the balance sheet of the Federal Reserve System.
The twelve (12) privately owned Federal Reserve Banks will return all assets held in trust for the United States government within thirty (30) calendar days of the signing of this bill into law.
The gold reserves of the United States government that are held in storage by the Federal Reserve Bank of New York will be transferred to the Government's depository at Ft. Knox, Kentucky, within one calendar year after this bill becomes law. The Government Accountability Office will conduct an inventory of the gold held in storage by the Federal Reserve Bank of New York before and after this transfer.
The Board of Governors will vacate the premises of the Federal Reserve building within thirty (30) calendar days of the signing of this bill into law.
Any pension fund assets of the employees of the various Federal Reserve Banks will remain under the control of those banks. All pension obligations under the authority of the Board of Governors of the Federal Reserve System are hereby transferred to the Department of the Treasury, to be administered under the retirement program of the Department of the Treasury.

This is simple. The Board of Governors of the Federal Reserve System is a government agency. Its authority would be transferred to the U.S. Treasury.

Giving the Fed's authority back to the Treasury would undoubtedly result in hyperinflation.  I am with North in that the Fed will eventually be taken care of by the free market itself as the dollar continues to lose value.

Now for those pesky Chinese and their dastardly trade surplus.  Oh wait...:

For the first time in 7 years, China finally runs a trade deficit.  Robert Reich must be partying.
I will end with a great Rand Paul video where he challenges the Department of Energy on being "pro-choice."