Monday, August 25, 2014

Fed Follies: Central Bank Continues to Force Economy in Wrong Direction

Richard Ebeling emails:

Dear Bob,

I have a new article on the news and commentary website, “EpicTimes,” on “Fed Follies: Central Bank Continues to Force Economy in Wrong Direction.”

For over ten years, now, the Federal Reserve monetary central planner have been obsessed with one major bogyman: the fear of deflation, a general decline in prices.

The recent boom bust cycle was caused by team Greenspan-Bernanke focusing on an “inflation-target” of two percent annual rising prices to prevent any possibility of falling prices. The new Fed chairperson, Janet Yellen, is dedicated to the same faulty logic.

Falling prices can be a sign of economic growth and prosperity as more and better goods are produced at lower costs, so they can be sold to the buying public at decreasing prices. This was the case during America’s “industrial revolution” in the years between the end of the Civil War and the beginning of the 20thcentury.

The Fed’s greatest experiment with manipulating the “price level” was in the 1920s, when it attempted to prevent gently falling prices by “price level stabilization” through monetary expansion. The end result: the Great Depression.

The Federal Reserve’s monetary expansionary and interest rate manipulating policies are setting us up again for a possible “great fall,” as it “inflation-targets” in the pursuit of monetary central planning.

Best wishes,

1 comment:

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