Since it began operations in 1914 the Federal Reserve System (”the Fed”) has presided over a relentless decline in the value of the US dollar. Prices increased in 83 of the 97 years of the Fed’s existence. Over the last 60 years, beginning in 1950, prices rose in 58 of them. As a result the cumulative loss of the dollar’s buying power during the Fed’s existence has been staggering. For example, today a consumer pays $22.13 to purchase a basket of goods comparable to a basket that a consumer in 1913 would have paid $1.00 for.

[This article is excerpted from The Austrian School of Economics: A History of Its Ideas, Ambassadors, and Institutions (2011). An MP3 audio file of this article, narrated by Paul Strikwerda, is available for download.]

CNBC brought its usual A-game this morning when its in-studio guest Constance Hunter, Chief Economist for Aladdin Capital Holdings, was called upon to comment on the CPI data released. Immediately after the government reported “headline” CPI increase of .5% and “core” (everything but food and fuel) CPI increase of .2%, market maven Hunter was asked whether the Federal Reserve should be reacting to the headline numbers. Ms. Hunter replied,

Being on food stamps used to be considered an embarrassment. People used to hide it. I remember my grandmother speculating about the ne’er do wells living down the street, “I hear they’re on food stamps,” she said derisively. It was the ultimate indignity to have the government pay for your groceries. People on food stamps were either lazy or slimeballs gaming the system, stealing from everyone else.

History is littered with monetary managers who believed they were in total control — until the disaster hit.

Gold is the universal language and has been for eons.