So here's a question for the armchair economists among us: "The Fed's rate hikes have raised the borrowing costs for millions of Americans on everything from adjustable rate home mortgages to auto loans." So the government determines this crucial aspect of the marketplace. In what sense is that free market capitolism at work?
It's all smoke and mirrors. We have not been a free market since well 1900.
Free market capitalism requires sound monetary policy and a sound currency, the latter of which implies low inflation. Fre market capitalism does not connote wild anarchy in business dealings.
And despite the claims that we haven't had a free market for 100 years, that's nonsense. If anyone wants to go out and start a business, who's stopping them? The entire job growth in this latest expansion has come from small business...households forming startups. That is free market.
Good question!
Its not. They are, in essence, rigging the free market capitalist system and affecting changes in it.
However, in a rational sence, they are controlling the Economy so as to smooth out the Highs and Lows (the Amplitude of the Waves).
The government doesnt determine anything as far as interest rates. The FDIC does. Check on it. Its a few banks setting the rates for the currency and all Congress does is go along.
It isn't and isn't supposed to be. There is a valid reason to increase the money supply to keep prices from deflating. The problem is Presidents like to have dollar policies, usually weak ones, and the Fed usually accomodates that. The Fed also doesn't believe in market signals like the yield curve, so they move rates around until they break something or they hit a nice round number.