Editorial
Fed Up with the Fed
While the Fed has recently released an unprecedented amount of information on its activities, there is still much that remains unknown. Predictably, every push towards transparency has been fought tooth and nail. It took disclosure requirements enacted within the Dodd-Frank Act to get the Fed to provide data on its emergency lending facilities. It took lawsuits filed by Bloomberg and Fox News to provide data on discount window lending during the worst parts of the financial crisis. And it will take further concerted action on the part of Congress, the media and the public to keep up pressure on the Fed to become and remain transparent.
Transparency is not a panacea, however, as a fully transparent organization is still capable of engaging in all sorts of mischief. Ironically, one of the Fed's more egregious recent actions, adopting an explicit inflation target, was hailed by many as another wonderful example of transparency. Yet if you think about what this 2% inflation target actually is, you realize that it is an explicit policy to devalue the dollar and reduce its purchasing power. And it adds up quickly over time. Two percent annual price inflation means that prices rise 22% within a decade, and nearly 50% within two decades.
It is worse than that, however. This explicit 2% target also fails to take into account that whatever measure is used to determine price inflation, be it CPI, core CPI, PCE, etc., will always be chosen with an eye towards underreporting the true rate of inflation and price rises. Pressure will be exerted on those calculating the price indices, so as not to alarm the public when prices begin to accelerate.
Of course, government officials claim that price increases do not affect the average American because they can always substitute hamburger for steak, or have cereal instead of bacon to protect their family budget as prices rise. But the American people don't overlook the fact that their quality of life has suffered because of the Federal Reserve and price inflation. What will they substitute when hamburger and cereal go sky high?
The Federal Reserve continues to keep interest rates low in the hopes of boosting lending and consumption. But keeping interest rates at zero discourages saving. Why stick money in a savings account earning 0.05% if it is guaranteed to lose at least 2% every year? The Federal Reserve created the largest debt bubble the world has ever known with these sorts of policies. The extended zero interest rate policy only eviscerates thrift and savings − the true building blocks of prosperity. Capital will continue to be depleted, infrastructure will fall into disrepair and the United States will be a mere shadow of its former self.
It is well past time to end the failed monetary policy that encourages this mistaken preference for cheap money now, rather than real wealth in the long run. Transparency and a full audit of the Federal Reserve is a start and something we must continue to pursue. And, if those in power don't have the stomach to bring the Fed out into full daylight, the American people deserve at least the right to conduct their economic transactions in the medium of exchange of their choosing.
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Posted by jnelson on 03/08/12 08:10 AM
The free market needs to begin to respond in more creative ways. Ways that no doubt will draw opposition in the form of law-enforcement and regulatory effort. Another Fort Sumter, anyone? How much "frog in a hot pot of water" encroachments on our freedoms and prosperity are Americans willing to accept? Will the rest of you wake up one day and discover that the most of the freedom-loving brain trust currently still among us have emigrated to safer havens? Countries such as Chile, Bahamas, Australia, Thailand... .?
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Posted by DwightMann on 03/07/12 06:47 AM
The hundred year pact with the Fed comes up for re-ratification in 2013. It needs to come to an end. Make congress do its job. . .
RP in 2012!
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Posted by James Jaeger on 03/06/12 11:42 PM
]Substitute cereal for bacon? Is that really a valid substitution for purposes of calculating the government-sanctioned "CPI"?
Economist, John Williams discusses these substitutes in SPOILER. http://youtu.be/GbF5loRF61U
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Posted by flying_pig on 03/06/12 10:11 PM
Substitute cereal for bacon? Is that really a valid substitution for purposes of calculating the government-sanctioned "CPI"?
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Posted by Abu Aardvark on 03/06/12 08:17 PM
Fed Up with ... Romney?!?
"Six Romney Family Members Hit Campaign Trail… For RON PAUL"
Click to view link
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Posted by budwood on 03/06/12 06:27 PM
The transgressions of the Federal Reserve are pretty sickening when one tallies up the loss of purchasing power of the US$ ($1 purchasing power in 1913 and 3 or4 cents now) and the misallocations of billions if not trillions of productive efforts. It seems inconceivable that such malfeasance could be carried on for so long without significance condemnation being visited on the perpetrators.
Right now, our money is being devaluated at a higher rate and our savings upon which vibrant societies are built are being ravaged. How can any logical evaluation come up with any conclusion other than we, collectively, are the victims of criminally insane activists.
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Posted by carterh on 03/06/12 05:22 PM
Excuse the overly simplistic question, but if the Fed owns 20% of outstanding securities, then does the Fed not essentially own us? And WHO owns the Fed?
Reply from The Daily Bell
Good questions ...
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Posted by Bluebird on 03/06/12 03:24 PM
Agreed. That just enraged me. Who do these jokers think they are? I know many people who cannot even afford meat at all-of ANY kind. Things just have to change.
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Posted by Ron Mexico on 03/06/12 02:13 PM
Wow, hamburger for steak and cereal for bacon, huh? And what to do if we are eating hamburger and cereal in the first place? They are comparing apples to oranges. When they do that they can make the numbers say anything they want them to.
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Posted by Bluebird on 03/06/12 10:16 AM
:-) No, I haven't been feeding them. I would not feed wolves either, but that would not stop them from getting into the feed stuff.
Good idea about the printing. I like it. But alas, only their banker buddies get the money. But hey, I have been getting so many brand new $ bills lately when I withdraw cash! Never crinkly and dirty. Wonder how that is happening? Maybe we should ask Ben whatshisname.
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Posted by amanfromMars on 03/06/12 07:42 AM
And that could be Alreadily OccupyD Territory, rossbcan.
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Posted by rossbcan on 03/06/12 07:01 AM
"Until he controls our Travel"
when $US worthless, you aint going anywhere, and most will be in the "hat in hand" possition of asking "please sir, can I have some more?" and, when ask turns to unappeaseable demand, FEMA camps await.
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Posted by Merridth80 on 03/06/12 06:42 AM
With what we are seeing in the news of soetoro/obama's blatant lies/deceptions & distortions, how can anyone be stupid enough to vote for him, AGAIN?
With so many millions of us, "How is it we can't shut down the FED"?
If the PE control so much in our world why don't we stop buying their products, just make our own!
If soetoro/obama wants the Catholics to give out B.C. & They choose not to, Let them shut down their Hospitals, Schools etc, & go to a country who will accept them for what & Who they are!
If he decides that we will all do his bidding, whatever, Then we have the alternative to do the same, right here in our own Country!!!
Until he controls our Travel, which he intends to do, we can move freely in this Country. There are places where you can go!
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Posted by rossbcan on 03/06/12 06:37 AM
@DB
May be time to research, consider and write an article regarding the implications and machinations of "stakeholders" to the fact that the FED's 100 year mandate (monopoly on money, subverted to "printing elite wealth") runs out early next year, leaving a "power vacuum", ground to be contested.
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Posted by rossbcan on 03/06/12 06:12 AM
RP: "underreporting the true rate of inflation and price rises."
Effective economic / investment, or any CORRECT choices cannot be made in the absence of REAL / true information, pricing or otherwise:
Click to view link
... and, when people / business malinvest (tricked) because of false information (lies), the ventures, lacking any REAL economic value, fail and, monetary interests pick up the residual REAL resources (title to REAL property) at fire sale prices. The "loss" (profit to perps) is socialized and "added to the tab" of "debt of nations".
In this manner, because of information fraud and many other "backed by guns, controlled by predators", coercive factors, slowly, but surely, the "seed corn of civilization", stored wealth is redistributed from the productive to the unproductive, destroying the ability of the civilized to survive and changing the REAL definition of civilization from peaceful, voluntary "division of labor" TO forcefully / fraudulently imposed "division of spoils".
Pandora's Box is pried wide open:
Click to view link
... by those who seek to own it all and control everyone, to restore the feudalism that our ancestors so rudely destroyed by demanding and successfully fighting for freedom to peacefully exist subject to the constraint that we do not cause or initiate harm against others.
"Be neither predator, nor prey, nor tolerate others to be" NO EXCEPTIONS.
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Posted by Agent Pete 8 on 03/06/12 03:40 AM
You are far too kind Bluebird, and I hope you havent been feeding them, especially after dark.
I know of a dog called DelKey, who seems to understand economics and politics far better that that Ben whatshisname, our former owner?
The Feral Reverse could use a deal with HP for people to print money in their own homes, cheaper than ATMs by far.
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Posted by Bluebird on 03/06/12 12:54 AM
"... , government officials claim that price increases do not affect the average American because they can always substitute hamburger for steak, or have cereal instead of bacon to protect their family budget as prices rise."
And WHAT, pray tell, do these "government officials" eat? The most expensive foods our money can buy. Throw the jerks out and let them eat what the rest of us do and maybe we won't oomplain as much. Hamburger and cereal are already higher than is reasonable. Why is it impossible to have several hundred more like Ron Paul in office? I have never been sicker of a bunch of lawmakers in my long life! And doggone it, that is being kind!
