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CFR’s Benn Steil Doesn’t Know the Velocity of Money is a Variable

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"CFR’s Benn Steil Doesn’t Know the Velocity of Money is a Variable"

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Amity Shlaes got fired from The Financial Times for being incompetent and went on to write a book about the New Deal that (a) is riddled with errors of fact and interpretation and (b) reached conclusions about economics that conservatives like. Since (b) is all that’s required in the contemporary United States to enjoy a prosperous career as a high-profile public intellectual it doesn’t surprise me in the least that she is enjoying just such a career. Nor is it surprising that a slipshod book would become congressional conservatives’ bible as they ponder Barack Obama’s economic recovery proposals.

I was, however, initially surprised to see that she’s not hanging her shingle at AEI or Heritage or Cato or the like but instead at the Council on Foreign Relations which one thinks of an outfit more likely to be guilty of being soporifically dull than batshit rightwing.

It seems, however, that Shlaes is not alone. A chap named Benn Steil is director of international economics at the Council on Foreign Relations. He also, as Brad DeLong points out, doesn’t seem to know that the velocity of money is a variable. In other words, cash and cash-like monetary instruments can circulate through the economy more or less quickly. This is a really basic error, but the terminology and the concept are going to be a bit obscure to a lot of people. It would be nice if we had institutions like the CFR around to help explain them to a broader public. Instead, we have institutions like the CFR sowing confusion.

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