US Action News

Fall for their deflationary warnings at your own risk. The Fed only knows one course and is embarked on it big-time — INFLATION!

The dollar tumbled against most major currencies on Thursday, prompting warnings that the weakness of the world’s reserve currency could destabilise the global economy and push other countries into retaliatory devaluations to underwrite their exports.

Maybe the Fed can fool some of the people some of the time, but it can’t fool all of the people all of the time. In the process, policy makers may end up fooling themselves that they can create expectations of a little more inflation without delivering a lot of the real thing.

The Fed has turned out to be perhaps the biggest single source of economic instability. It’s the big pig at the trough, and it’s unpredictable. It doesn’t follow any rules consistently.

“Stripped of its academic jargon, the welfare state is nothing more than a mechanism by which governments confiscate the wealth of the productive members of a society to support a wide variety of welfare schemes. But the welfare statists were quick to recognize that if they wished to retain political power, the amount of taxation had to be limited and they had to resort to programs of massive deficit spending, i.e., they had to borrow money, by issuing government bonds, to finance welfare expenditures on a large scale.”~ Alan Greenspan

Inflation? Deflation? Quantitative easing? Listen to Rick Santelli explain the complexity of markets and fed moves.

Columbia Business School Spring 2006 Follies video spoof on The Police’s “Every Breath You Take” featuring imitation Dean Glenn Hubbard and Fed Chairman Ben Bernanke

“Christina Romer, who recently stepped down as a White House economic adviser, said the Fed is in uncharted waters and it is unclear how much further easing will accomplish.” -Reuters

As the U.S. economy struggles and flirts with the prospect of deflation, some central bank officials are publicly broaching a controversial idea: lifting inflation above the Fed’s informal target.

Inflation is a quiet but effective way for the government to transfer resources from the people to itself, without raising taxes.