In the period from 1913 to 2007, the Fed — implementing its mission to "stabilize the price level" — destroyed over 97 percent of the purchasing power of the dollar. (For comparison's sake, note that the value of the dollar had increased slightly during the 100 years before the Fed was created.)
Central bank's and government's loose monetary and fiscal policies are instrumental in the weakening of the process of real savings formation through the diversion of real savings from wealth generators to non-wealth-generating activities.
"The key thing is that the price of producer goods has to fall faster and farther than consumer goods for the correction process to proceed."
Wall Street — especially since this financial crisis began — has been anything but a bastion of laissez-faire capitalism.
The Fed has essentially created the biggest shipment of currency ever, but the crippled banking system hasn't yet delivered it to our prison camp. When it arrives, it might be handy to have some spare smokes around to trade with.
At no point in his speech did Mr. Dudley raise the possibility that the main source of asset bubbles could be the US central bank itself.
The individual is always ready to ascribe his good luck to his own efficiency…. But reverses of fortune he always charges to other people…."
– Ludwig von Mises
By piling on trillions to the national debt, the government will have to keep interest rates low for a longer period, promoting ever-greater debt. The result of this must be unsustainably higher levels of debt — and the worst financial crisis ever seen in the history of mankind.
"Interventionism is not an economic system, that is, it is not a method which enables people to achieve their aims. It is merely a system of procedures which disturb and eventually destroy the market economy. It hampers production and impairs satisfaction of needs. It does not make people richer; it makes people poorer."
The Obama administration pulled out the old bag of tricks and claimed that they only needed to loot the public of hundreds of billions and spend it on building up government, and then, wow, like magic, the entire economy would come back to life.
