Wednesday, April 27, 2011

Ben's Funny Money

Despite higher commodity prices over the past 18 months (source), Federal Reserve chairman Ben Bernanke continues to maintain that the current monetary policy is not causing excessive inflation and that the $600 billion in additional "Quantitative Easing" (printing additional Federal Reserve Notes and using them to buy Treasury Bonds), has been effective in stabilizing the U.S. economy (source).  Most Americans are unlikely to take Bernanke's word over their own grocery bills and stagnant job searches.

As one financial blog reports:
Since last August when it became clear that the Fed would initiate QE2, we have witnessed the following results: Home prices have continued to decline, the 30 year mortgage rate has increased from 4.2% to 4.8%, new housing starts declined to all time lows, the 10 year treasury note rate has increased from 2.6% to 3.4%.  (source)
With one in six Americans on some form of government assistance (source), the purchasing power of the dollar on the decline since the creation of the Fed in 1913 (source), and the U.S. Government's debt soaring (source), it's time to call this horror show by its true name:

Meanwhile, gold and silver prices continue to rise at record rates - not because they are becoming more valuable but because they retain value while the dollar loses purchasing power as more of them are printed.  Between the creation of the Fed in 1913 and the removal of the dollar from the gold standard in 1971, the dollar has continued to plummet in value and inflation continues to rise while employment stagnates - failures on both of the Federal Reserve's government mandates.

"Paper money eventually returns to its intrinsic value: zero." -Voltaire

Also, the new Keynes vs. Hayek rap battle by EconStories is fantastic:

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