Bernanke’s Mentor Acts Like…Bernanke…In Israel…

Hundreds of thousands gathered in Israel last weekend in protest over the increased cost of living.  Over 400,000 Israelites protested, which at first glance may seem paltry, but given that the total population of the country is about 7.4 million, that’s a nice chunk of the population.  In relative terms, if it were the US that would represent approximately 16.5 million people.  Article here.

Price inflation can be as destructive as any force to society and the people of Israel are feeling the squeeze of devalued money.  In the mid 80’s, while playing with a Rubik’s cube and mastering Super Mario Brothers, the Bank of Israel ramped up their money printing, expanding the monetary supply, which in turn eroded their currency and rose inflation rates to triple digits.   One would naturally think that with such a track record and mistakes to draw upon, that heightened money supply increases would not be part of the Israeli economic policy…but alas, this is Econolol…

As it turns out, Ben Bernanke (often referred to as “the bernank) had a Ph.D. thesis advisor with a shared penchant for dumping currency out of helicopters as a panacea for all economic ills.  This man, Stanley Fisher, also happens to be the head of the Bank of Israel.  Under his leadership, the money supply increased by more than 50%…in an economy that is far less layered than the US, the results of this are more immediate, but ultimately follow the same basic principle: if some dude prints a ton of money, it probably will make everyone’s money worth less.

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