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American Principles In Action - WSJ Market Watch: What's so Bad About Falling Prices 

Dear Monetary Policy Observer,


A common argument we hear from the Federal Reserve is that the economy needs inflation to avoid financial crises like the Great Depression.  APIA’s Economics director Rich Danker makes a case for deflation in a recent article for the Wall Street Journal’s Market Watch, citing history and a study for the Minneapolis Reserve Bank as evidence that maybe falling prices aren’t so bad for the economy after all.


We hope you find this material of interest.




Nicholas Arnold

American Principles In Action


What’s so bad about falling prices? Nothing

Opinion: Fed is mistaken to think that deflation is a bad thing

As Ben Bernanke hands over the Federal Reserve chairmanship to Janet Yellen at the end of January, leadership of the central bank will be passed from one strident deflation foe to another.

All the way back in 2002, Bernanke in his speech “Deflation: Making Sure ‘It’ Doesn’t Happen Here,” proposed what would become his program to fight deflation in response to the 2008 financial crisis: a zero fed funds rate and large-scale Treasury debt purchases aimed at bringing down interest rates to encourage economic activity. We came to know it as quantitative easing.

Yet five years in, those policies are still entrenched (despite last month’s “taper”) with Yellen set on maintaining them.

What’s happened in the American economy since then? Not deflation, defined as a decrease in the broad price level. You can conclude that Bernanke’s experiment worked in achieving its purpose of making sure “it” didn’t happen here, but you can also conclude from the data that his purpose was misguided from the start and it backfired.

Bernanke’s seminal academic experience is the Great Depression, an era he interprets (influenced by Milton Friedman) as caused by deflation from the Fed.

But does deflation cause depression? That’s a question two economists, Andrew Atkeson and Patrick Kehoe, examined in a 2004 paper for the Federal Reserve Bank of Minneapolis. No, they say. Their data set of 17 countries across 100 years found that nearly 90% of periods of deflation did not have depression. They acknowledge an exception in the surprise deflation of the Great Depression, but say that it is “not an overwhelmingly tight link.”

But their point is not to try and refight the cause of the Great Depression, as Bernanke is wont to do, but defend the concept of deflation from the catastrophe ascribed to it. After all, what is so bad about falling prices? As the publisher and financial historian James Grant likes to point out, this is exactly what draws carloads of people to Walmart every weekend.

The Walmart era of American economic history isn’t actually the contemporary one, but the 1879-1914 period when a surge in innovation and output made commodities cheaper and even food prices stable.

This was natural “good” deflation driven by the increase in the supply of goods — as opposed to a Fed-driven decrease in the money supply that Bernanke and Friedman blame for the Great Depression. People got the dual benefit of a robust economy and flat-to-falling prices.

Read the Fulll Article Here:


ALG's Daily Grind - The fate of the Union


Jan. 31, 2014

Never a dull moment in D.C.
In place of the usual post-State of the Union lull, the age of new media has highlighted a new environment of restlessness in Washington D.C..

Cartoon: Business vs. Government

The Muzak State of the Union
The meaning of words still matter beyond how they sound. It's easy to forget that listening to President Barack Obama sometimes, like during the State of the Union Tuesday.

Wall Street Journal: Obama to Nominate Navy Cybersecurity Chief to Head NSA
Vice Adm. Michael Rogers, currently the commander of U.S. Fleet Cyber Command, is set to be named by President Barack Obama as the next director of the National Security Agency.


Rubens For US Senate - Sen. Shaheen Wants You to Forget 

On Wednesday, Senator Shaheen penned a letter to HHS Secretary Sebelius expressing concern that New Hampshire currently only has one healthcare provider on the federal marketplace and that 10 of the state's 26 hospitals have been excluded from that provider's network.

In the letter she writes, "I am concerned that in some areas of my state, the choice of a robust provider network may not be available, as only one insurer is currently participating in New Hampshire's federally facilitated marketplace."

Senator Shaheen wants you to forget that she was the deciding 60th vote for Obamacare. Her vote makes her personally responsible a law which terminated longstanding relationships between tens of thousands of New Hampshire people and their preferred doctors and hospitals.

She wants you to forget that she said "If you like your insurance, you can keep it" which PolitiFact called the "lie of the year".

The question presents itself, why does New Hampshire have only one health insurance provider while other states have several to choose from?

Senator Shaheen wants you to forget that, as state senator in 1994, she was lead sponsor of SB711 which, just like Obamacare, imposed government price controls and product restrictions on health insurance policies. Her law resulted in several years of chaos in the New Hampshire health insurance marketplace and a dramatic reduction in choices for consumers.

In 2002, the legislature was forced to substantially repeal SB711, but its damage could not be completely undone.

As the Union Leader points out, "That law drove 21 insurers out of the state. New Hampshire went from having 26 health insurers in 1994 to only five just eight years later. A study by the Rhode Island legislature, conducted 12 years after SB711 passed, concluded that the bill was what drove those insurers out of state."

The people of New Hampshire have good memories.

Senator Shaheen can continue to act as if she is shocked by how Obamacare has hurt New Hampshire's people, but we know better. She should have learned from her terrible mistake with SB711, which is why we have only one insurance choice in the Federal exchange.

US Senators should vote for laws only after understanding their full ramifications. We can't afford six more years of Senator Shaheen voting for legislation that she later realizes is harmful to the citizens of New Hampshire.

But pointing out that Senator Shaheen did not learn from her mistakes is not enough.

We must reduce America's highest in the world healthcare costs and increase healthcare quality and access. I have proposed solutions to these challenges that increase consumer choice and insurance options and give healthcare providers and insurance companies freedom to innovate.

Please support my campaign by donating $25, $50, $100, or more


Jim Rubens


NH GOP - Obama vs The Constitution 


President Obama used the State of the Union Address to reaffirm his plan to act unilaterally to do anything he thinks he can get away with, even without the authority from the Constitution or the consent of Congress.

The Constitution provides the primary rules for the federal government. Barack Obama is defying the Constitution of the United States of America. Obama is not upholding the Presidential Oath of Office.

The State of the Union Address should have informed the country of the high unemployment rate, the lack of job creation, the failure of Obamacare, and the explosion of debt under his watch.

I am asking for your support of the New Hampshire Republican State Committee. Our Party has the only elected officials who care about the Constitution. The Democrats are not even trying to follow the law; they just want more power.

Jeanne Shaheen, Carol Shea-Porter, and Ann Kuster have proven they are unfit to represent us again. They too have violated their oaths and their promises to the citizens of New Hampshire.

They stand by President Obama's infractions of the Constitution. They put their radical ideological agendas ahead of the law of the land. Since they agree with Barack Obama on every single issue, they are perfectly happy with disregarding the Constitution.

Please make a donation to the NH GOP to strengthen campaigns of candidates who will honor the Constitution.



Karen Testerman


Citizens Report: SOTU, Shaheen tele-town hall, and more... 

Senator Jeanne Shaheen hides behind a tele-town hall meeting
While she refuses to hold public town hall meetings, after months of pressure from Citizens for a Strong New Hampshire, Senator Shaheen is still hiding, but has decided to host a tele-town hall meeting next week.

While we certainly still believe that this is a poor excuse for communicating with constituents, we encourage all Granite Staters to participate and ask her some of the important questions - such as why she still supports a failing Obamacare, why she ignores our skyrocketing debt and deficit, and how come shehasn't apologized for telling 22,000 Granite Staters who lost their insurance under Obamacare the "Lie of the Year."

In order to participate in the tele-town hall, you must pre-register.  Please click HERE to visit Senator Shaheen's website and sign-up.  After participating in her tele-town hall, email and let us know your thoughts on the meeting.
Responding to President Obama's State of the Union Address
On Tuesday, President Obama held his fifth State of the Union Address. In response to his speech, Derek Dufresne, spokesman for Citizens for a Strong New Hampshire made the following statement:

"President Obama delivered a message to the American people this evening with his central focus being that if Congress does not support his tax-and-spend liberal agenda, he will circumvent our forefathers' vision of checks and balances and separation of powers to accomplish his goals unilaterally. 

"Tonight we hoped for a message of leadership that would lower our debt and deficit and spur economic growth for all Granite Staters. However, we were given more of the same failed policies that have resulted in higher unemployment and larger government. All Americans deserved better."

Citizens for a Strong New Hampshire's statement was used in the Nashua Telegraph's editorial titled, "Play our State of the Union game."
Live Tweeting during the #SOTU
For you Twitter fans, we had a great response from our live tweet session during the State of the Union Address. If you're on Twitter, follow us at @4StrongNH. Here are some highlights from Tuesday evening:

God bless Army Ranger Cory Remsburg and all who serve. #SOTU
Remember, it's cuz of @BarackObama, @SenatorShaheen, @RepAnnieKuster & @RepSheaPorter that 22k Granite Staters lost their insurance. #SOTU

More executive orders from 

@BarackObama. Remind us again why he is even visiting Congress tonight? #SOTU #nhpolitics #tcot

@BarackObama, if you want to ensure every child has a good education, join us and #StopCommonCore #nhpolitics #tcot #SOTU


erhaps @BarackObama should visit New Hampshire before discussing climate change this month in his #SOTU. #nhpolitics #tcot

@BarackObama, when during your discussion on energy policy will you bring up the #Keystone
 Pipeline? #SOTU #tcot #nhpolitics

Again... @BarackObama ..."I'll work on my own." Can someone pass him a #Constitution 
#SOTU #nhpolitics

Why are certain members of congress cheering when @BarackObama just said he would work around them? #SOTU #nhpolitics #tcot

Mr. President, you still fail to recognize that the best way for gov. to 'create more jobs' is for gov. to get out of the way! #SOTU


Senator Jeanne Shaheen's "Lie of the Year"


THIS image we created this week was a big hit on Facebook and Twitter. Be sure to "share" and "retweet" it to continue to remind Granite Staters that Senator Shaheen told us the "Lie of the Year," that we would keep our health insurance under Obamacare. 



Laugh of the week    
Here's some humor for your Friday, especially if you felt this way during Tuesday's State of the Union. Have a great weekend, Granite Staters!