The Fed's Federal Open Market Committee renewed its commitment to easy money this week. The Fed will pretend to be committed to raising rates while doing nothing, and its ongoing war against deflation will continue to make us poorer.
The problem with the central bank's easy-money policies is not primarily that it leads to rising prices. The big problem is that it leads to the crippling of the wealth creation process and the movement of resources from productive to non-productive sectors.
The Fed has a difficult balancing act. To maintain the current easy-money induced boom, it must not raise rates. But at the same time, it must also act as if it might raise rates some day, or savers will abandon the credit markets.
100 percent-reserve banking is being introduced through the backdoor by U.S. regulators who remain queasy about banks runs in a future crisis.
Whether its drug prices, crushing debt, or unemployment, government can always come up with someone else to blame. Fortunately though, in spite of the lackluster economy the Fed and the government seem committed to giving us, there's hope for a much better future.
The United Nations recently passed a resolution in which those who lend money to governments are denounced as "vultures" while the governments themselves are portrayed as hapless victims. This isn't exactly a complete and accurate picture of the situation.
The Pope is touring North America this week, promoting a variety of interventionist “solutions” to global warming, poverty, and more. But a far more powerful religious figure, Janet Yellen, continues to pull the levers of the global financial system.
There’s much debate over how the Fed determines interest rates. Many pundits seem to assume that central banks dictate interest rates to the market. In fact, central banks mostly affect interest rates indirectly through their power to change the money supply.
Senior Fellow Mark Thornton is interviewed on The Power & Market Report. Dr.
