Since 2008, a key component of Fed policy has been to buy up mortgage-based securities and government debt so as to both prop up asset prices and increase the money supply. Over this time, the Fed has bought nearly $9 trillion in assets, thus augmenting demand and increasing prices for both government bonds and housing assets. Moreover, these purchases were made with newly created money, contributing greatly to liquidity and the easy-money policies that have prevailed since 2009.

Dealing with specific geopolitical circumstances can be messy. We may disagree on the facts and on which sources are reliable, making it hard to make any headway in a discussion. This may be further compounded by extreme emotions we may have about that situation. The advantage of purely theoretical inquiry is that we can stipulate the facts so as to make the analysis as simple as possible, and avoid much of the emotional baggage that stymies understanding.

I recently wrote a piece explaining that there is a libertarian case for taking away Disney’s Florida privileges. However, I am writing this to stress that while strategically that is the appropriate approach, we must not throw out the baby with the bathwater.

A standard trope in socialist circles is that the poor and downtrodden refuse to vote their economic interests. See, e.g., Thomas’s Frank’s “What’s the Matter with Kansas? How Conservatives Won the Heart of America. This theory is used to justify various anti-democratic schemes to “protect” the vulnerable from themselves. If, after all, the poor aren’t voting their interests, then why can’t we achieve Pareto-optimal interventions on their behalf? 

The global monetary system is facing historic challenges. 

President Joe Biden in the state of the union address called for a $15 minimum wage along with pushing against and calling out corporations for spreading inflation.

It was last August when Jerome Powell began to admit that inflation just might be a problem. But even then, he was only willing to say that inflation would likely be “moderately” above the arbitrary 2 percent inflation standard. Back in August, low inflation—not high inflation—was still perceived to be the “problem.” But things had certainly changed by late November when Powell was forced by reality to retire “transitory” as the preferred adjective to describe price inflation.

Inflation in the US is at forty-year highs, while interest rates on ten-year Treasury notes just hit 3 percent—signaling trouble for home buyers. Truck drivers pay more than $1,000 to fill their rigs with $5 per gallon diesel to deliver your increasingly expensive groceries and Amazon packages. Crime and homelessness skyrocket in large cities, exacerbated by virulent opioids like fentanyl and krokodil. And America’s proxy war with Russia in Ukraine gives rise to the most serious threats of nuclear strikes against the West since the 1960s.