Posted on 12/22/2015 5:16:04 AM PST by Kaslin
Stocks rose Wednesday following the Federal Reserve's announcement of the first interest rate increase since 2006. However, stocks fell just two days later. One reason the positive reaction to the Fed's announcement did not last long is that the Fed seems to lack confidence in the economy and is unsure what policies it should adopt in the future.
At her Wednesday press conference, Federal Reserve Chair Janet Yellen acknowledged continuing "cyclical weakness" in the job market. She also suggested that future rate increases are likely to be as small, or even smaller, then Wednesday's. However, she also expressed concerns over increasing inflation, which suggests the Fed may be open to bigger rate increases.
Many investors and those who rely on interest from savings for a substantial part of their income cheered the increase. However, others expressed concern that even this small rate increase will weaken the already fragile job market.
These critics echo the claims of many economists and economic historians who blame past economic crises, including the Great Depression, on ill-timed money tightening by the Fed. While the Federal Reserve is responsible for our boom-bust economy, recessions and depressions are not caused by tight monetary policy. Instead, the real cause of economic crisis is the loose money policies that precede the Fed's tightening.
When the Fed floods the market with artificially created money, it lowers the interest rates, which are the price of money. As the price of money, interest rates send signals to businesses and investors regarding the wisdom of making certain types of investments. When the rates are artificially lowered by the Fed instead of naturally lowered by the market, businesses and investors receive distorted signals. The result is over-investment in certain sectors of the economy, such as housing.
This creates the temporary illusion of prosperity. However, since the boom is rooted in the Fed's manipulation of the interest rates, eventually the bubble will burst and the economy will slide into recession. While the Federal Reserve may tighten the money supply before an economic downturn, the tightening is simply a futile attempt to control the inflation resulting from the Fed's earlier increases in the money supply.
After the bubble inevitably bursts, the Federal Reserve will inevitability try to revive the economy via new money creation, which starts the whole boom-bust cycle all over again. The only way to avoid future crashes is for the Fed to stop creating inflation and bubbles.
Some economists and policy makers claim that the way to stop the Federal Reserve from causing economic chaos is not to end the Fed but to force the Fed to adopt a "rules-based" monetary policy.
Adopting rules-based monetary policy may seem like an improvement, but, because it still allows a secretive central bank to manipulate the money supply, it will still result in Fed-created booms and busts.
The only way to restore economic stability and avoid a major economic crisis is to end the Fed, or at least allow Americans to use alterative currencies. Fortunately, more Americans than ever are studying Austrian economics and working to change our monetary system.
Thanks to the efforts of this growing anti-Fed movement, Audit the Fed had twice passed the House of Representatives, and the Senate is scheduled to vote on it on January 12. Auditing the Fed, so the American people can finally learn the full truth about the Fed's operations, is an important first step in restoring a sound monetary policy. Hopefully, the Senate will take that step and pass Audit the Fed in January
Return to the gold standard, deep 6 the fed, and let the chips fall where they may, There will eventually be where the can that keeps being kicked down the street will disintegrate, and when it happens it won’t be pretty.
That would be the best option for our grandbabies.
The Fed is nothing more than a liberal slush fund with a printing press.
Ron Paul’s still around?
Since the Fed can time recessions with its boom-bust cycle, and since that is a political attack, the Fed really needs to end.
The Founding Fathers knew better than allowing such an apparatus into the nation. The abhorred the very thought.
People are getting dumber, not smarter.
Hard to tell if that means you’re FOR or AGAINST the Fed.
But, to dismiss the topic/idea at hand based on your own beliefs/perceptions of a single man show just how ignorant We the People have become.
Ron was the ONE person in D.C. who took the lead against this atrocity.
- Congress has NO authority to created/hand-over powers to a non-govt entity
- We the People are getting swindled with the ever present inflation, while the Fed/banks get the fruits of our labor/savings (banks get $$ @ near 0%, and turn around to charge us > 0% for the ‘favor’ of borrowing funny ‘money’)
- The tasks given to the Fed (a ‘stable’ economy) are pie-in-sky dreams; they’ve caused more runs/busts.
Well when it comes to the Fed everyone has their opinion.
The federal reserve should be eliminated and the United States Treasury should print money. The feds decision tree can programmed into a executable that will fit on a laptop.
Since the federal reserve was founded in 1913 we’ve paid about 20 trillion in interest payments. Eliminate that and we eliminate the debt. Let the owners (Rosthchilds, Morgans, Mellons, Rockefellers) eat the 20 trillion we currently owe, they can afford it (or not, who cares, we have a bigger military). And get our gold back.
You mean the Founders who created the first US Central Bank in 1791?
People are getting dumber, not smarter.
Irony, now twice as ironic.
Who paid that interest? Who did they pay it to?
Eliminate that and we eliminate the debt.
How do you figure?
Let the owners (Rosthchilds, Morgans, Mellons, Rockefellers) eat the 20 trillion we currently owe,
Those people don't hold the bonds sold to finance the debt, why would they "eat it"?
Do We Need Ron Paul?
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