Let’s declare victory in this debate because our opponents cannot and will not engage even our most basic arguments. I submit that they sense that our position is irrefutable and are acting accordingly.

I find this to be the most interesting paradox on the left. They openly rail against banks yet support the biggest and most evil bank of them all.

But if you can create money out of thin air and buy bonds with it, and then earn interest on those bonds, wouldn’t it be pretty hard to lose money?”

Can the bonds default, without a taxpayer bailout?

(But they just might, if interest rates should spike.)

Which interest rates? If the Fed can create money to buy nominally riskless securities, like Treasury bonds, then interest rates on these securities cannot spike. Other interest rates can spike without affecting the Fed if the Fed does not hold these securities.

The primary problem with the Fed buying Treasuries is that Congress is selling them.

There is no hyperinflation because the banks are holding the newly created money as excess reserves with the Fed. If the banks begin lending and the money multiplier is enacted, …

Bernanke obviously knows this too. If inflation exceeds his target (which is now higher), he can raise the interest rate on reserves at the Fed to discourage this money multiplication.

The money multiplier is meaningless if banks only lend against sound collateral. A deposited dollar does not imply a dollar’s worth of sound collateral, so it doesn’t imply a loan, so it doesn’t imply any money multiplication.

… M1 itself (which consists of not just physical paper but also checking account deposits) has indeed risen sharply …

Does M1 include the corporate TAG accounts that Doug French discussed at the Mises Institute last month?

I want to end the Fed as much as anyone by the way.

Many of her objections (e.g., 6 and 7) were formatted as such:

“Myth: x is true

Many people say that x is true. But some people say y.”

Therefore, y must be true!