The Federal Reserve Now Is between the Proverbial Rock and a Hard Place
The Federal Reserve has sabotaged the economy since 1913 with its socialistic interventions. Every single boom created via its artificial credit expansion has resulted in disaster, which includes the Great Depression, which was caused by nearly a decade of inflation that begun as an effort to help finance the government’s involvement in World War I.
The Federal Reserve’s efforts appear akin to a blind infant performing a piano concerto but the truth is far worse. No one can possibly know the correct interest rate. When not manipulated by the Federal Reserve, interest rates are determined by the ratio between savings and consumption among all the people, a ratio economists call time preference. Manipulating the interest rate lower merely pushes it out of step with the people’s time preference and plants the seeds of an inevitable crash.
By creating trillions of new dollars and thereby artificially lowering the interest rate, the Federal Reserve has created an “everything bubble.” Every asset class is ripe for a massive crash. Resist attempts to blame anyone else for rising prices. Government didn’t suddenly start running deficits and businesses didn’t suddenly become greedy or acquire the power to dictate market prices. The new dollars created by the Federal Reserve must go somewhere, and where they go, they bid up prices.
Further, as the new dollars are created, they’re almost always distributed to the rich and powerful before “trickling down” to the poor and middle class and bidding up the prices of the things they buy most. Thus, the rich and powerful are granted increased purchasing power, often for high-sounding causes. This explains increasing wealth inequality. This is also why inflation causes prices to rise faster when the new dollars are sent to the masses, for then those dollars don’t have to trickle down before they are spent and bid up the prices of what the recipients pu
Article from Mises Wire