Liberty Maven

The Federal Reserve’s decision yesterday to cut interest rates to zero sets the stage for future inflation, maybe hyperfinflation. During the Great Depression it was said that inflation was our salvation.

It seems to me that fiddling around with interest rates and adding more and more regulation causes the problems. Then these same government sponsored meddlers are tasked with “fixing” the problems that they created themselves. This is dishonest. It is like the auto mechanic that punches a whole in your muffler then calls you to let you know that your muffler is in need of repair. If the mechanic would just leave the muffler alone it wouldn’t need fixing.

Back to the topic of inflation, in a recent column by Liberty Hero Walter E. Williams, inflation is defined:

Several prices rising are not inflation. Only when prices across the board rise is there inflation. But just as in the case of diseases, describing a symptom does not necessarily tell us the cause. That is the same with inflation; it is a symptom of something else. Nobel Laureate and noted monetary theorist Milton Friedman explained, “(I)nflation is always and everywhere a monetary phenomenon, in the sense that it cannot occur without a more rapid increase in the quantity of money than in output.” Put another way, inflation results from an increase in the supply of money relative to the demand for money.

That being the case, who is responsible for inflation? It’s not you or I because if we privately increased the supply of money to finance profligate spending, we would be charged with counterfeiting and go to prison. The Federal Reserve Bank, our central bank, is the only entity legally permitted to increase the supply of money, to finance Congress’ profligate spending. The Federal Reserve Bank is supposed to be independent but it typically accommodates the wishes of Congress and the White House.

Central banks are villains in most countries; ours is just not as bad as others.

Ah yes, central banks like our Fed are villains. Thanks to Ron Paul and columnists like Williams this topic has been placed a bit further in to the main stream consciousness. In fact a FOX Business News anchorman for the show “Happy Hour” is now advocating abolishing the Fed. Wow. Yes, Cory Willard of FOX recently wrote an article with the title, “The Federal Reserve Is Ruining Us and Must Be Destroyed“. That is certainly not the kind of doublespeak beating around the bush rhetoric we expect to hear from the media.

If the Fed’s actions yesterday and recently end up pushing us down further into the financial inferno, maybe the country’s “government will save us” mentality will fall by the wayside. One can only hope.