The Federal Reserve Is Killing The Economy

I was watching Good Morning America this morning (blame the wife, I can't stand it), and I noticed they were discussing how the Dow Jones Industrial was nearing 13,000 again while the NASDAQ was closing in on 3,000.

It got me pondering on the current discussion about where the inflation rates currently sit on the CPI (sitting at 2.3% right now). Many of the mainstream economists (Krugman, Baker, Wiesenthal, etc) have touted the line that because of this ~2% inflation rate, inflation isn't happening.

This is true in a sense.

What they fail to realize is for all intents and purposes, the economy should be in a deflationary period but isn't because of the massive amount of monetary expansion by the Federal Reserve.

Since the recession started in 2007, the Federal Reserve has printed $2.7 trillion dollar in two round of quantitative easing (buying US Treasury bonds). On top of that, it has kept the Fed rate (the basis for all interest rates) at  historic 0.5%. These are the same policies which led to the housing & credit bubble in the first place.

And it will have disastrous results in the future.

Because all this money is being pushed into the markets, the economy is incapable of removing the enormous amount of bad money (debt) it has in its system. Almost every aspect of the market is inflated from the deflationary lows they need to be at a sustainable rate. The Fed rate needs to be elevated much higher to discourage the massive debt leveraging the Wall Street banks participated in from 2001 - 2007.

This is why so many among the Austrian School warn about inflation, even though we are currently in a stagnant period. If the economy recovers, the monetary expansion is going to rear its ugly head and create a staggering amount of inflation, which will be nothing but destructive for the average citizen, wiping out any savings in cash and destroying wealth.

The mainstream economists and government policy makers are going to be the end of the middle class if we do not wake up and start protecting our wealth.

This article was originally published 2/21/12.

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Why I'm Starting This Blog

At one point, I had four blogs. I know. Excessive. It stems from my incessant need for compartmentalization. My first blog, One Man's Liberty, was political. I discussed every and any thing involved with politics, from the Federal Reserve and monetary policy to immigration to drug policies to foreign policy. Some people even read it! (Not many though)

My second blog, Jake's Studio, was about my writing. I posted original stories and reviews of any TV shows that I felt like reviewing along with any TV, movie, or book news I found interesting. Some people read it too. Mainly Russian and Chines bots.

As for the other two, Just 4 U (MIL's and SIL's invitation/fancy stuff business) and Academy of Free Thought (my education blog), I haven't actually posted any content to them yet, and I won't unless my MIL and SIL decide they want to start the website.

What I want to do with The Rantin' Arkansan is condense these blogs into one, plus add other areas. Basically, anything that interests me. I'll discuss politics. I'll discuss philosophy. I'll discuss education. I'll discuss writing. I'll discuss TV, movies and books. I'll discuss sports. I'll discuss family, life, and emotions. I'll post stuff bragging about my son (because he's awesome!), and I'll post stuff bragging about my wife (because she's awesome too!). I promise you that I won't always write like this. I am quite capable of varying sentence structure and syntax. I think.

WARNING: I will piss people off! Sometimes I curse. Sometimes I curse a lot. I'm a market anarchist. I will explain that later. I can be arrogant, indignant, and a complete jackass sometimes (or so my wife says). I hold many unpopular opinions, and I'm not afraid to put them out there. I will not kowtow to politically correct language. But, I also won't try to say things that are mean or overly insensitive. I do ask, when (more likely if) commenting, please don't attack people. I also do not tolerate trolling.

Essentially, I started this blog because I feel like I've got stuff to say, and my wife is tired of listening to me bitch about it all. I look forward to some fun discourse (if anyone ends up ever reading this).

-Jake