American's simply can't afford to ignore any longer the dreadful reality that the U.S. economy is dying, nor can we ignore the frightening reality of just how disturbing America's fiscal debacle truly is.
Blowing bubbles as we're currently doing (and have done for decades) in hopes of stirring the "animal spirits" is to rely on pure fantasy. We either face the truth by making bold and fundamental changes soon, or we're (quite literally) up the creek without a paddle. Because as Tyler Durden succinctly notes in the previously linked post, there is no "Hollywood ending with a pot of gold awaiting everyone at the end" of the road we're traveling.
American opinion of the federal government has sunk to an all-time low, yet Americans continue being reluctant about pointing their finger of blame squarely at the perpetrator. The Tea party crowd blames "the Democrats," and the Occupy Wall Street folks insist that it's all the fault of "Wall Street," but what about the federal government itself (regardless of whose team is in charge)? Aren't Uncle Sam's fingerprints all over this mess?
More importantly though, what about that all-powerful unelected bureaucracy, otherwise known as the Federal Reserve?
What is the name of the largest bank in America? The Federal Reserve. Which institution holds an exclusive, federally-protected monopoly on money? The Federal Reserve. Which institution can legally print money out of thin air? The Federal Reserve. Which institution is primarily responsible for regulating the banking industry? The Federal Reserve. Which institution speculates on the entire economy by manipulating interest rates? The Federal Reserve. Which institution bails out banks and other large corporations by printing money out of thin air? The Federal Reserve. Which institution enables Congress' profligate deficit spending while sticking taxpayers with the bill? The Federal Reserve.
Are you starting to get the picture?
The only public official in the United States who understands economics is Rep. Ron Paul (R-TX). And with a long track-record to prove it, you and I both know that it's long past time we heed his advice. So, please read the following easy to understand yet penetrating, Wall Street Journal op-ed by Ron Paul about the damage caused by our unelected central bank - The Federal Reserve.
Blame the Fed for the Financial Crisis
The Fed fails to grasp that an interest rate is a price, the price of time. Attempting to manipulate that price is as destructive as any other government price control.
By RON PAUL
To know what is wrong with the Federal Reserve, one must first understand the nature of money. Money is like any other good in our economy that emerges from the market to satisfy the needs and wants of consumers. Its particular usefulness is that it helps facilitate indirect exchange, making it easier for us to buy and sell goods because there is a common way of measuring their value. Money is not a government phenomenon, and it need not and should not be managed by government. When central banks like the Fed manage money they are engaging in price fixing, which leads not to prosperity but to disaster.
The Federal Reserve has caused every single boom and bust that has occurred in this country since the bank's creation in 1913. It pumps new money into the financial system to lower interest rates and spur the economy. Adding new money increases the supply of money, making the price of money over time—the interest rate—lower than the market would make it. These lower interest rates affect the allocation of resources, causing capital to be malinvested throughout the economy. So certain projects and ventures that appear profitable when funded at artificially low interest rates are not in fact the best use of those resources.
Eventually, the economic boom created by the Fed's actions is found to be unsustainable, and the bust ensues as this malinvested capital manifests itself in a surplus of capital goods, inventory overhangs, etc. Until these misdirected resources are put to a more productive use—the uses the free market actually desires—the economy stagnates.
The great contribution of the Austrian school of economics to economic theory was in its description of this business cycle: the process of booms and busts, and their origins in monetary intervention by the government in cooperation with the banking system. Yet policy makers at the Federal Reserve still fail to understand the causes of our most recent financial crisis. So they find themselves unable to come up with an adequate solution.
Read the whole thing here: Blame the Fed for the Financial Crisis