Keynesians claim that through the “multiplier,” a country can spend itself into prosperity. All that is needed is for government to tax, borrow, print money and spend, and prosperity will follow. Austrian Economists, however, are not fooled by such myths.
The ruling classes and their media blamed the 2008 financial crisis on free markets and too little government regulation. However, because the Federal Reserve promised to help cover losses in financial markets, it practically invited reckless behavior.
The central bank monetary shenanigans in both Europe and the US no longer can be ignored or covered up. Unfortunately, as their economies falter, the Fed and the European Central Bank will resort to even more financial trickery to cover for previous monetary foolishness.
According to Keynesian “economics,” central bank interest rate cuts will make the economy stronger—unless the economy is in a “liquidity trap.” The truth is that these kinds of monetary tricks actually weaken the economy.
The principle of Occam‘s Razor states that we should avoid superfluous activity. When it comes to our monetary system, however, the Federal Reserve System doesn't simplify things, but instead complicates the economy. That alone is reason for it to be abolished.
President Trump‘s recent assertions that the Fed should lower the discount rate puts him squarely in the middle of Fed politics and exposes the messy truth that the Fed is not an independent group of experts but rather a tool of the political system.
While monetary authorities and the government claim that they are “fighting inflation,” the truth is that inflation is an important tool for political and economic elites who are centralizing political life.
What happens to businesses when liabilities exceed assets? They go bankrupt, with the spectacular failure of FTX being front-and-center. However, the Federal Reserve is in the same position but unlike FTX, the Fed can create fictitious assets and pretend that nothing is happening.
With people calling for an audit of the US gold stores at Fort Knox, perhaps we should remember how that gold got there in the first place. Franklin Roosevelt‘s theft of gold from the American people is a crime that still needs to be rectified.
Economists like to claim that expectations of more inflation lead to, well, more inflation. Such beliefs ignore the fact that inflation is an increase in the money supply and that general price increases result from fractional reserve-created monetary expansion.
