Monetary Policy

We are stuck in the middle of the road, far away from full socialism or the unhampered market.

Keynesians believe that if there is a bout of inflation, central banks can slowly guide the economy to a “soft landing” which minimizes unemployment and income losses. Such policies, however, only lead to further boom-and-bust scenarios.

Keynesian economists claim that the economy needs at least 2-3% inflation in order to avoid business cycles. But these inflation rates over time are economically ruinous and they actually harm economic growth.

The Fed for many years has manipulated the money supply in order to attempt to keep interest rates below market levels. At some point, however, the market prevails in one way or another.

Most Americans have no idea of the damage that the Federal Reserve system has done to their daily lives. Unfortunately, most Americans are not particularly interested in finding out either.

Luke Gromen told Dale Pinkert on the Forex Analytics F.A.C.E.

As the Federal Reserve manipulates the money supply and interest rates, the yield curve becomes a less reliable indicator of economic activity. The more the Fed plays havoc with the system, the more we see the boom-and-bust syndrome.

After a dramatic couple of days in the markets, economists and political figures are calling for the Fed to cut interest rates. But if we ever want to see an end to all this economic chaos, what we need are not lower rates or higher rates, but accurate interest rates. 

Even if we were to agree with the MMT advocates that MMT allows the economy to easily shift from privately-produced to government-produced goods and services, we still ask why people should be forced to purchase inferior goods.

Continued bailouts undermine the entire economy by rewarding financial failure and discouraging productive economic activity.