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Powell’s Unnecessary Pain


Chairman of the Federal Reserve Jerome Powell pulled the cat out of the bag: Our central bank believes that the best way to fight inflation is to deliberately slow the economy, thus raising interest rates.

The real cause of monetary inflation is the creation of too much money. The remedy is to stabilize the value of the dollar. Period. The Fed did this from the late 1980s to the late 1990s, when Fed chief Alan Greenspan openly and freely pegged the greenback to gold. The period was known as the “Great Moderation”. Unfortunately, Greenspan then abandoned this approach, first tightening monetary policy, then turning 180 degrees and letting the value of the dollar fall, which ultimately led to the catastrophic housing boom and financial crisis of 2007- 09.

As for interest rates, the Fed should leave them alone. The price of the “rental” of money should be set freely in the market by the borrower and the lender.

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