by Ron Paul
Federal Reserve was no doubt troubled by July’s decline in the U.S.
unemployment rate to 4.5 percent and increase in job openings to 11.2
million. This is because the Fed’s strategy for reducing the historic
price inflation now plaguing the economy — caused by the Fed’s
unprecedented low or zero interest rate policies — is to increase
unemployment in order to decrease consumer spending. In his speech to
annual monetary policy conference in Jackson Hole, Wyoming, Fed Chair
Jerome Powell reiterated his commitment to increasing unemployment, or,
puts it, “softening the labor markets.”
Powell is correct that reducing price inflation is urgent. He is also correct that doing so will increase unemployment and slow economic growth. The Fed’s efforts to bring down inflation by increasing interest rates will also make it harder for average Americans to obtain home mortgages, purchase a car, or even pay their utility bills. Those hardest hit by the Fed’s “softening of labor markets” are also the primary victims of the Fed-created price inflation. This demonstrates the insanity and cruelty of the fiat money system, which enriches the elites while improvising the masses.
It is amazing that more individuals do not question the idea that inflation, recessions, unemployment, and booms and busts are necessary features of a sound monetary system. Even many otherwise staunch defenders of free markets maintain a child-like faith in central banking. Some conservatives support “reforming” the Fed by making it follow a “rules-based” monetary policy. These conservatives do not understand that the problem is the existence of a central bank with the power to manipulate the currency.
Many progressives recognize the damage the Fed does to average Americans when it increases interest rates. However, their "solution” is a cure worse than the disease: make the Fed maintain low interest rates (and thus high inflation) in perpetuity—or until the continued devaluation of the currency via inflation causes a dollar crisis, leading to a major economic calamity. The main victims of this crisis will, of course, be the very Americans progressives claim to care about.