Ben Bernanke Needs To Stop Hanging Out With Pro Athletes

PHILADELPHIA - SEPTEMBER 26: Jayson Werth #28 of the Washington Nationals singles up the middle during a game against the Philadelphia Phillies at Citizens Bank Park on September 26, 2012 in Philadelphia, Pennsylvania.

Photo by Hunter Martin/Getty Images

Word is out today that Ben Bernanke is a big Washington Nationals fan and outfielder Jayson Werth says he’s even tried to talk to Bernanke about QE 3. This could get dangerous.

The reason is that there are a lot of myths out there about monetary policy. In particular, there are erroneous perceptions that tight money is in the interests of some large set of people when in reality the overwhelming majority of Americans would benefit from more stimulative monetary policies. The unemployed would get jobs and the employed would get raises, but business owners would also get more customers. The indebted would secure relief, but the owners of capital would see higher stock prices. It’s win-win-win-win-win for everyone. 

Except pro athletes, that is.

Pro athletes are unusually in that they tend to sign very long-term contracts for fixed nominal sums. Werth, for example, inked a seven-year $126 million contract in December of 2010. He’ll be in the second season of that deal right now, so for the next five years there’s a specific nominal quantity of dollars that he’s going to earn no matter what happens in monetary policy. Consequently, in a very unusual way his real earnings over the next five years will be determined not by how well he plays or by how well the Nationals do or by the general fate of Major League Baseball or the overall market for baseball players. It’ll be determined by Ben Bernanke. If inflation were to rise to 3 or 4 percent per year, I think that would be very good for the overall economy and 99 percent of us would benefit. But not Werth. He’d be screwed. It’s an unusual situation to be in, though, so we have to hope Bernanke doesn’t let himself get unduly influenced by Big Sports Star.