Tuesday, July 14, 2009

The Big Myth of the last century exposed

The Federal Reserve was established in 1913.
We were once told that boom-bust business cycles were a thing of the past because, thanks to the Fed, we now had scientific management of the money supply. If anyone believes that today, I’d like to meet him. Artificially low interest rates courtesy of the Fed do not yield us a utopia of sunshine and kittens. To the contrary, they artificially stimulate capital-goods production and long-term investment. They thereby deform the structure of production into a configuration that the public’s freely expressed pattern of saving and consumption will be unable to sustain. When this phony boom inevitably collapses, it is "capitalism" that takes the blame – when in fact the Fed, a non-market institution, is the culprit.
Whole essay.