The Fed

Section Four: Money and the State. Narrated by Harold L. Fritsche.

Section Four: Money and the State. Narrated by Harold L. Fritsche.

Section Four: Money and the State. Narrated by Harold L. Fritsche.

Section Four: Money and the State. Narrated by Harold L. Fritsche.

Section Four: Money and the State. Narrated by Harold L. Fritsche.

Keynesians enthusiastically point to government as the solution for the faltering recovery.

Each round of money printing eventually feeds back into the price system, creating demand for another round of money printing, and another, with each increase larger than the previous one. The law of diminishing marginal utility applies to money as it does to all goods and services.

Janet Yellen celebrated her confirmation as Fed Chairman on January 6 by immediately issuing a carefully hedged prediction: “I am hopeful that the

The Bernanke Fed followed Keynes’s advice. The way to avoid a new slump is to keep interest rates low for as far as the eye can see as a way to overcome a lack of “animal sprits” and thus sustain a quasi-boom. As long as inflation is low, no harm, no foul. In fact, as the thinking goes, more inflation might be beneficial.

Central banks always result in feeding forces that centralize and expand the nation-state. The Fed’s policies in the 1920s, would provoke the Great Depression, which, in the end, wrenched political power from cities and state governments to the swampland in Washington