Does either of the above preclude the other? In other words, if we expect gold to reach $7000.00 per ounce, and we are correct, does that mean that we can’t reasonably expect gold to go as low as $700.00 per ounce? Conversely, if we are predicting or expecting gold to decline from its current level and even breach $1000.00 per ounce on the downside, can $7000.00 per ounce, or anything even remotely close to that number, be a reasonable possibility?
inflation
How Government Causes Inflation
We know that inflation is the debasement of money by government. The effects of inflation show up in the form of rising prices over time. The rising prices are a reflection of the loss of purchasing power of the currency involved. For our purposes, that means the U.S. dollar.
The chart below depicts increases in the Consumer Price Index, year-to-year, dating back to 1914…
Inflation Is Not Our Biggest Threat
You wouldn’t know that by listening to current commentary on the economy.
There is a bigger threat, though. But first, there is some clarification about inflation that is necessary.
Most people infer rising prices when they hear the term inflation. That is not correct. The rising prices are the ‘effects’ of inflation. The inflation, itself, has already been created.
It is not created, or caused, by companies raising prices. And it is not created by ‘escalating wage demand’.
When someone says “inflation is back”, they are referring to rising prices. Yet they are wrong on two counts.
First, as we have previously said, the rising prices, generally, are the effects of inflation.
Second, the inflation isn’t back; because it never went away.
From my book INFLATION, WHAT IT IS, WHAT IT ISN’T, AND WHO’S RESPONSIBLE FOR IT:
“Inflation is the debasement of money by the government.
There is only one cause of inflation: government. The term government also includes central banks; especially the U.S. Federal Reserve Bank.”
The Federal Reserve caused the Depression of the 1930s and worsened its effects. Their actions also led directly to the catastrophic events we experienced in 2007-08 and have made us more vulnerable than ever before to calamitous events which will set us back decades in our economic and financial progress.
The new Chairman of the Federal Reserve, Jerome Powell, is personable, likable, candid, and direct. But he cannot and will not preside over any changes that will have lasting positive impact.
The Federal Reserve does not act preemptively. They are restricted by necessity to a policy of containment and reaction regarding the negative, implosive effects of their own making.
And their actions, especially including the inflation that they create, are damaging and destructive. Their purpose is not aligned with ours and never will be.
Yet they are not independent. In fact, they have a very cozy relationship with the United States Treasury. That relationship is the reason they are allowed to continue to fail in their attempt to manage the economic cycle.
There are two specific terms which describe our own actions and relationship with the Federal Reserve – obsession and dependency.
We are bombarded daily with commentary and analysis regarding the Fed and their actions. Almost daily we are treated to rehashing of the same topics – interest rates, inflation – over and over. And we seemingly can’t read or hear enough, i.e. obsession.
But are we reading or hearing anything which will help us gain a better understanding about the Federal Reserve? And what, if anything, can we realistically expect them to do?
We are also hooked on the liberally provided drug of cheap credit. Our entire economy functions on credit. We are dependent on it. And without huge amounts of cheap credit, our financial and economic activity would come to a screeching halt.
A credit implosion and a corresponding collapse of stock, bond and real estate markets would lead directly to deflation. The incredible slowdown in economic activity leads to severe effects which we refer to as a depression.
Deflation is the exact opposite of inflation. It is the Fed’s biggest fear. And it is a bigger threat at this time than progressively more severe effects of inflation.
The U.S. Treasury is dependent on the Federal Reserve to issue an ongoing supply of Treasury Bonds in order to fund its (the U.S. government’s) operations. During a deflation, the U.S. dollar undergoes an increase in its purchasing power, but there are fewer dollars in circulation.
The environment during deflation and depression makes it difficult for continued issuance of U.S. Treasury debt, especially in such large amounts as currently. Hence, the resulting lack of available funds for the government can lead to a loss of control.
The U.S. government is just as dependent on debt as our society at large.
The following excerpt is from my new book ALL HAIL THE FED!:
“When something finally does happen, the effects will be horribly worse. And avoidance of short-term pain will not be an option. The overwhelming cataclysm will leave us no choice.
As severe as the effects will be because of previous avoidance and suppression, they will also last longer because of government action. The cry for leaders to “do something” will be loud and strong. And those in authority will oblige.
But don’t look to the Federal Reserve for a resolution. They are the cause of the problem.”
Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN’T, AND WHO’S RESPONSIBLE FOR IT and ALL HAIL THE FED!
The Federal Reserve – Purpose And Motivation
With each succeeding day, obsession with the Federal Reserve continues. And the obsession is a good indicator of just how misinformed most of us are.
This is true with respect to various policies, statements, and actions; and includes comments made by board members, either in speeches or interviews. But it is also true regarding purpose and motivation.
To a large extent, it is a matter of perception. Some, maybe most, people see the Fed as the lead driver. There is an assumed aura of authority and control. On all matters economic, we look to them for direction. But where are they taking us?
Kelsey Williams Interview With David Scranton
Kelsey Williams was interviewed by David Scranton on The Income Generation show March 1, 2018 about his book: Inflation – What It Is, What It Isn’t, And Who’s Responsible For It.
Here are the links to the interview:
FULL SHOW [1] https://vimeo.com/advisorsacademy/review/258621529/28ad77b32f
KELSEY WILLIAMS[2] https://vimeo.com/advisorsacademy/review/258625019/3179c3db98
https://vimeo.com/advisorsacademy/review/258621529/28ad77b32f
https://vimeo.com/advisorsacademy/review/258621529/28ad77b32f
Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN’T, AND WHO’S RESPONSIBLE FOR IT and ALL HAIL THE FED!
Gold, U.S. Dollar, And Inflation
GOLD, US DOLLAR, AND INFLATION
Gold bulls have a short memory. Last year at this time, gold was similarly priced and they were quite bullish then, too. But their expectations didn’t ‘pan out’ as expected. In fact, gold prices turned and went in the opposite direction, hitting lows in late summer well below $1200.00 per ounce.
The downturn was unexpected. But it was unexpected because most analysts and investors were looking in the wrong place for the wrong clues.
Gold’s price changes over time in response to changes in the value of the U.S. dollar. But some additional explanation is necessary.
Some say that a weaker U.S. dollar ’causes’ a higher gold price. That is like saying that lower interest rates cause higher bond prices. That’s not the way it works.
Gold and the US dollar move inversely. So do bonds and interest rates.
If you own bonds, then you know that if interest rates are rising, the value of your bonds is declining. And, conversely, if interest rates are declining, the value of your bonds is rising. One does not ’cause’ the other. Either result is the actual inverse of the other.
When you were a kid you probably rode on a see-saw or teeter-totter at some time. When you are on the ground, someone on the other end of the see-saw is up in the air. And, vice-versa, when you are up in the air, the other person is on the ground. Again, one does not ’cause’ the other. Either position is the inverse of the other.
Most of those who comment on gold consider the dollar to be one of several factors contributing to a higher gold price. But, in truth, gold’s price reflects only one specific thing: changes in value of the U.S. dollar.
There are six major turning points (1920, 1934, 1971, 1980, 2001, 2011) on the chart below. All of them coincided with – and reflect – inversely correlated turning points in the value of the U.S. dollar.
Since gold is priced in US dollars and since the US dollar is in a state of perpetual decline, the US dollar price of gold will continue to rise over time. There are ongoing subjective, changing valuations of the US dollar from time-to-time and these changing valuations show up in the constantly fluctuating value of gold in US dollars.
There is also more talk about inflation recently. So here is an axiom to remember: inflation is the debasement of money by the government.
When you hear someone referring to things such as ‘cost-push’ or ‘demand-pull’ inflation, accelerated wage growth pressure, or an ‘over-heated economy’, listen politely. But know that there is only one cause of inflation – government. And government in this case includes central banks, especially the United States Federal Reserve Bank.
Government creates inflation by expanding the supply of money and credit. They do this intentionally and continually under the pretense of managing the economic cycles.
Since inflation, as practiced by government, is ongoing, the risks are cumulative. As that cumulative risk builds, events triggered by the effects of inflation become more volatile; and they are unpredictable.
When the Federal Reserve responded to the financial crisis of 2007-08 by increasing hugely their monetary expansion efforts, many thought that it would lead to runaway inflation and collapse of the U.S. dollar. It didn’t. But it did drive the prices of assets like stocks, bonds, and real estate, much higher.
Originally, of course, the price of gold surged in response to the Fed’s efforts. Since gold’s price is an inverse reflection of the U.S. dollar, it should come as no surprise that the dollar continued its long decline in value; and significantly so.
But the drop in the value of the dollar and gold’s higher prices from that point forward were mostly in anticipation of damaging effects from the Fed’s inflation in the form of significantly higher prices for all goods and services. In essence, a repeat of the seventies, only much worse, was expected. And the looming threat of U.S. dollar repudiation fanned the flames.
But there was no significant increase in the “general level of prices for goods and services”. And U.S. dollar weakness (possibly overdone) eventually reversed and the price of gold began to decline (2011 – see chart above).
Between 2011 and 2016, the U.S. dollar continued to strengthen and gold’s price continued to decline. At that point the two reversed direction again and that brings us to where we are currently.
Some are convinced that recent dollar weakness will continue unabated and that the price of gold will soar soon. Some are still banking on severely damaging effects from the Fed’s past money creation efforts. And still others are short-term traders who are looking at their charts and want to be “on the right side of the trade”.
Most of them will likely be disappointed – again. There are two reasons:
1)The fundamentals and logic involved are inconsistent and flawed.
2)The effects of inflation are volatile and unpredictable.
Applying investment logic to gold leads to erroneous conclusions. Gold does not react or correlate with anything else – not interest rates, not jewelry demand, not world events.
Changes in gold’s price are the direct result of changes in the value of the US dollar. Nothing else matters.
Since paper currencies and credit can be manipulated by government, expectations and reactions become more volatile and increasingly unpredictable.
That should be relatively clear; especially after what we have experienced in the past ten years. But some are still predicting a gold ‘moonshot’. And they want it now.
Something like that may occur. In fact, it is quite possible. But when? It will only happen if it is accompanied by a complete collapse and repudiation of the U.S. dollar.
The chart above is current. Does it look like we are in the midst of something similar to 1970-80 or 2001-11? Or something worse?
Yes, forewarned is forearmed. But most of those who are the most vociferous in their calls for huge increases in the price of gold are those who were doing so all during gold’s price decline from August 2011 through January 2016. What’s changed?
Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN’T, AND WHO’S RESPONSIBLE FOR IT and ALL HAIL THE FED!
Inflation – What It Is, What It Isn’t, And Who’s Responsible For It
INFLATION – WHAT IT IS, WHAT IT ISN’T
Inflation is an insidious threat to our financial and economic security. It has been foisted upon us to the point that we are in danger of losing much more than the value of our money. The capital markets are facing risks of immensely greater proportion than those of 2007-08. Economic activity is primarily financed by credit and we are hooked on the drug of money and higher prices – for everything. We are told often that inflation is spontaneous and that we must learn to mange its effects. That is not true.
Inflation is intentional and practiced by governments and central banks the world over. And its effects are unpredictable and destructive. In addition, the effects of inflation are cumulative; hence, they tend to be more volatile, ongoing. And buried underneath all of the surface weaknesses is the specter of fractional-reserve banking. It is the legalized version of Ponzi scheme. A special section on the topic is included.
Gold Prices – Inflation vs. Deflation
GOLD PRICES
Inflation is the debasement of money by government. The expansion of the supply of money and its subsequent loss in value results in an increase in the general level of prices for goods and services.
Deflation is characterized by a contraction in the supply of money and a decrease in the general price level of goods and services. (What we are currently experiencing is called ‘disinflation’ which is a lower rate of inflation.)
The purpose of this essay is to clarify and explain accurately what to expect regarding gold prices if deflation occurs.
According to Wikipedia: “Inflation reduces the real value of money over time, but deflation increases it. This allows one to buy more goods and services than before with the same amount of money.”
The United States Government, via the Federal Reserve Bank, has been practicing inflation regularly for over one hundred years. They are good at it. Their efforts have resulted in a ninety-eight percent “reduction in the purchasing power per unit of money.”
The reduction in purchasing power of the U.S. dollar is reflected in the higher price of gold.
In 1913, with gold at $20.65 per ounce, twenty U.S. dollars in paper money was equal to twenty dollars in gold. Today gold is at $1270.00 per ounce, more than sixty times higher than in 1913.
The higher price for gold does not mean that gold has experienced an increase in purchasing power. Rather, its higher price reflects the decline in purchasing power of the U.S dollar.
Deflation is different. It is the exact opposite of inflation. And the results are different as well.
As we said earlier, deflation is characterized by a contraction in the supply of money. Hence, each remaining unit is more valuable; i.e. its purchasing power increases.
Government causes inflation and pursues it for its own selfish reasons. A government does not voluntarily stop inflating its currency. And it certainly isn’t going to reduce the supply of money. So what causes deflation?
Government causes deflation, too. Deflation happens when a monetary system can no longer sustain the price levels which have been elevated artificially and excessively.
Governments love the inflation they create. But with even more fervor, they hate deflation. And not because of any perceived negative effects on its citizens. It is because the government loses control over the system which supports its own ability to function.
Regardless of the Fed’s attempts to avoid it, deflation is a very real possibility. An implosion of the debt pyramid and a destruction of credit would cause a settling of price levels for everything (stocks, real estate, commodities, etc.) worldwide at anywhere from 50-90 percent less than currently. It would translate to a very strong US dollar. And a much lower gold price.
Those who hold US dollars would find that their purchasing power had increased. The US dollar would actually buy more, not less. But the supply of US dollars would be significantly less. This is true deflation, and it is the exact opposite of inflation.
The relationship between gold and the US dollar is similar to that between bonds and interest rates. Gold and the US dollar move inversely. So do bonds and interest rates. If you own bonds, then you know that if interest rates are rising, the value of your bonds is declining. And, conversely, if interest rates are declining, the value of your bonds is rising. One does not ’cause’ the other. Either result is the actual inverse of the other.
Inflation leads to a U.S. dollar which loses value over time; hence, this is reflected in a higher gold price.
Deflation results in an increase in value/purchasing power for the U.S. dollar; hence, this is reflected in a lower gold price.
Those who expect gold to increase in price during deflation are wrong for several reasons.
Gold is not an investment. And it does not respond to the various headline items that journalists and analysts continue to repeat erroneously. It is not correlated with interest rates and it does not respond to housing statistics. It is not influenced by world events, terrorism, or the stock market.
Gold is real money. The U.S. dollar is a substitute for real money, i.e. gold.
If deflation occurs, there is no other possibility except for lower gold prices.
(to read more about gold and its relationship to the U.S. dollar, see here)
Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN’T, AND WHO’S RESPONSIBLE FOR IT and ALL HAIL THE FED!
Gold – A Better Explanation
GOLD – A BETTER EXPLANATION
The emotional adamancy which dominates most analysis of gold contributes to confusion and misunderstanding. For example, “Backdrop For Gold Today Is As Bullish As It Has Been In A Long Time”; or “Precious Metal Sector Is On Major Buy Signal”. These and other similar claims are often supported by reams of technical analysis – the best that money can buy.
And this is on top of general misstatements of fact. It would appear that there is virtually no justification for lower gold prices except when caused by manipulation associated with conspiratorial forces.
Otherwise world tension, terrorism, natural calamities, social unrest, economic weakness, interest rates, inflation, trade deficits, Indian jewelry demand, etc, etc. all put a ‘floor’ under the price of gold. At least this is what we are told.
And the timing: “It’s now (or never).” “Gold has finally broken through its overhead resistance.” “$2,000/oz by the end of 2017.”
Does understanding gold require a degree in cyclical theory or financial mathematics? Or is it related to climate change?
A simpler and better explanation for gold exists. It only requires a bit of historical observation.
1) First, and foremost, is the simple fact that gold is real money.
Its value (purchasing power) is constant and stable. And its role as money came about through trial and error. Gold has stood the test of time.
2) Second, paper currencies are substitutes for real money.
Gold is also original money. It was stored in warehouses and the owners were issued receipts which reflected ownership and title to the gold on deposit. The receipts were bearer instruments that were negotiable for trade and exchange.
3) Third, inflation is caused by government.
One thing that should be clear from history is that governments destroy money. That might sound harsh, but it is true. And when we say “destroy” we mean just that. Inflation is practiced intentionally by governments and central banks. Its effects are severe and unpredictable. The Federal Reserve Bank of The United States has managed to destroy the U.S. dollar by bits and pieces over the past century. The result is a dollar that is worth 98 percent less than in 1913 when the Fed began its grand experiment.
The relationship between gold and the US dollar is similar to that between bonds and interest rates. Bonds and interest rates move inversely. So do gold and the U.S. dollar.
If you own bonds, then you know that if interest rates are rising, the value of your bonds is declining. And, conversely, if interest rates are declining, the value of your bonds is rising. One does not ’cause’ the other. Either result is the actual inverse of the other.
A stable, or strengthening U.S. dollar means lower gold prices. A declining U.S. dollar means higher gold prices.
In other words, higher gold prices are a direct reflection of a weakening U.S. dollar.
And please don’t confuse the U.S. dollar with the U.S. dollar index. The U.S. dollar index(es) do not tell us anything about the price of gold. A dollar index reflects changes in the U.S. dollar’s exchange rate versus other currencies.
Actual changes in the value of the U.S. dollar show up in the ever-increasing general level of prices for all goods and services – over time. (See A Loaf Of Bread, A Gallon Of Gas, An Ounce Of Gold)
The threat of world war is ominously present today. Countries and municipalities are going bankrupt. And acts of terrorism are an almost daily occurrence. This is in addition to an economy that can’t seem to improve enough or sustain an acceptable rate of growth.
So let’s buy gold, right? Maybe, maybe not. You see, gold doesn’t care about those things. It doesn’t care whether or not somebody fires a rocket armed with a nuclear warhead or the state of Illinois declares bankruptcy. And it doesn’t react to comments by Janet Yellen or Donald Trump. Indian jewelry demand is not on its radar. Nor are housing starts.
Gold responds to one thing. Changes in the U.S. dollar. Nothing else.
A continually weaker dollar over time means higher gold prices.
Periods of dollar strength are reflected in a declining gold price.
Lets talk for a moment about North Korea and the threat of war. Its a very scary situation. But even if things get worse, it won’t have an impact on gold prices. Here’s why:
In late 1990, there was a good deal of speculation regarding the potential effects on gold of the impending Gulf War. There were some spurts upward in price and the anxiety increased as the target date for ‘action’ grew near. Almost simultaneously with the onset of bombing by US forces, gold backed off sharply, giving up its formerly accumulated price gains and actually moving lower.
Most observers describe this turnabout as somewhat of a surprise. They attribute it to the quick and decisive action of our forces and the results achieved. That is a convenient explanation but not necessarily an accurate one.
What mattered most for gold was the war’s impact on the value of the US dollar. Even a prolonged involvement would not necessarily have undermined the relative strength of the US dollar.
All of which leads us back to a simpler and better explanation:
Insofar as gold is concerned, it is all about the U.S. dollar.
Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN’T, AND WHO’S RESPONSIBLE FOR IT and ALL HAIL THE FED!
The Fed’s 2% Inflation Target Is Pointless
FED’S 2% INFLATION TARGET
Within the Federal Reserve sometime in 1996, a discussion took place among FOMC (Federal Open Market Committee) members regarding the subject of inflation targeting. Federal Reserve District Governor (San Francisco) Janet Yellen believed that a little inflation “greases the wheels” of the labor market. Her preferred “target” was 2%. She asked Chairman (at the time) Alan Greenspan his preference.
The Chairman replied. “I would say the number is zero, if inflation is properly measured.”
On the surface, it might seem that Chairman Greenspan is indicating that no inflation is preferable to “a little” inflation. But that is contradictory to the actual mechanics of ongoing monetary action by the Fed since its inception in 1913.
The Federal Reserve creates inflation through ongoing expansion of the supply of money and credit. Our fractional-reserve banking system is intrinsically inflationary – at the very least. And what did he mean by the parenthetical comment, “if inflation is properly measured”.
More likely, he was adopting the role of devil’s advocate and trying to promote further, active discussion among FOMC members. The results seem to indicate this.
In meetings the next day, Greenspan summarized the discussion: “We have now all agreed on 2 percent.” The Federal Reserve now had an internally stated, unofficial inflation target. Their own “guiding light”. But they didn’t want to talk about it publicly. At least Greenspan didn’t.
He termed their discussion “highly confidential (in) nature” and said: “I will tell you that if the 2 percent inflation figure gets out of this room, its going to create more problems for us than I think any of you might anticipate.”
Ben Bernanke didn’t share Greenspan’s reservations. He wanted everyone to know that the Fed’s inflation target was 2%. But why?
One possibility is the need for justification.
Actions by the Federal Reserve are historically unclear as to logic and purpose. That allows for a modicum of privacy and the false descriptive of an independent Fed. It also suggests an aura of ‘special dispensation’ surrounding the Fed.
By late 2010, however, those notions were unravelling quickly as people wallowed in the after effects of the financial crises of 2007-08. Mr. Bernanke and his fellow practitioners of monetary medicine were seen as ineffective, at best, and appeared as if they did not know what they were doing.
Action was, in effect, demanded. And they were not afraid to pull the trigger. But they needed a clear, publicly observable target. How does anyone know you hit the target if they don’t know what you are aiming at?
Having a clearly acknowledged target changes the focus. Judgment is restricted to the new area of focus. Did you hit the target or didn’t you?
This presumes that the target is justified, of course. And if an inflation target is justified, why 2%? Why not a lower number? Or any other number? In truth, it probably doesn’t make any difference.
From the Fed’s perspective, it gives them a license to openly discharge their firearms in the public square. If they miss, they can just reload and fire again.
Should they happen to hit the target, they can either maintain their current posture, or tweak it accordingly so as not to overshoot in the future.
But they will never “hit” their target. Especially this one. Why not?
Because it is a moving target, comprised of moving parts. And it is the result of the Fed’s own previous actions.
There is only one cause of inflation: government. The term government also includes central banks, especially the US Federal Reserve Bank.
What most people refer to as ‘inflation’ or its causes are neither. They are the effects of inflation. The “increase in the general level of prices for goods and services” is the result of the inflation that was already created. …Kelsey Williams
Bernanke pushed until he got his way. A formal, precise inflation target rate of 2% was adopted at the FOMC meeting on January 24, 2012.
Five years later…
HEADLINE: The Fed’s Janet Yellen could use some target practice…
Quote: Ever since the Federal Reserve adopted an explicit inflation target of 2% in 2012, the central bank has had limited success in hitting it. Only once, in fact, in the months between April 2012 and today, did the year-over-year increase in the personal consumption expenditures (PCE) price index breach 2%. …MarketWatch/Caroline Baum 12July2017
That shouldn’t be a surprise given that it’s a moving target. But there is more to it than that.
Right now, the inability to hit the target serves as the Fed’s perfect excuse for not acting more decisively. This is especially true with respect to raising interest rates. In addition, Ms. Yellen is afraid to do anything. Here’s why.
The bigger risk to the economy and financial stability is another credit collapse. And they can’t claim ignorance as they did the last time. They know its coming. They just don’t know when.
The levels of debt, the convoluted intricacies of the derivatives market, the interwoven relationships within the shadow banking system are all at hugely more precarious tipping points than ten years ago.
And it is the Fed’s own inability to hit the 2% inflation target that is warning them.
Think of all the hundreds of billions of dollars that went into saving the system from collapse before. And then force feeding the money drug into the patient for another nine years.
The problem is that all of the beneficiaries (i.e patients) of the Fed’s assistance are now hard-core addicts. If the Fed tries to raise rates they could very easily trigger another collapse much worse than before.
The Fed continues to look for the effects of all of those hundreds of billions of dollars to show up in the ‘rate’ of inflation. Supposedly that would be a sign to them of improved economic activity and growth. That isn’t happening.
The reason is because most of the ‘help’ effects showed up in ever higher prices for financial assets (stocks and bonds) and real estate.
And all of those toxic assets (CDOs of every letter and color, and various other esoteric derivatives) have swollen in price to levels far beyond any reasonable value. In addition, far too many of them are resting quietly on the Fed’s balance sheet.
The Fed has actually blown another bubble much bigger than the previous one. Nothing fundamental has changed. The only difference is that the situation is worse than before. Now, out of fear, they are trying to steer a course between action and inaction.
The action, of course, is raising interest rates and offloading their own balance sheet. But their actions could trigger events similar to 2007-08. In which case the Fed’s image would forever be tainted. (I think this is more of a concern for Janet Yellen than her fellow board members.)
The inaction – doing nothing – is pretty much where things are currently. If the Fed maintains ZIRP (zero interest rate policy), the patient could overdose and slip into a coma.
The Fed’s 2% inflation target is an attempt to predict the effects of inflation. That’s impossible. It is also unwise as it reinforces the acceptance of a “little inflation” as normal, necessary. It isn’t.
A “little inflation” is why the U.S. dollar is worth ninety-eight percent less than in 1913 when the Federal Reserve originated.
(Read more about the Federal Reserve here
Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN’T, AND WHO’S RESPONSIBLE FOR IT and ALL HAIL THE FED!