Nobel Prize recipient in economics, Paul Krugman, embraces the idea that more money printing can save the world stating, “Higher expected inflation would aid an economy.” Barack Obama embraced this philosophy with his 2008 Keynesian 800 billion dollar stimulus package. The hope was to sacrifice inflation and government debt for the promise of 4 million jobs. Hindsight has shown that the stimulus plan has only imposed a large debt burden on our young Americans, but did little, if anything, to help the economy grow. Instead, we have similar effects as New Deal programs left us, which Milton Friedman concluded “hampered recovery from the contraction, prolonged and added to unemployment and set the stage for ever more intrusive and costly government.” The anemic April jobs report show us that the Obama administration gave the U.S. economy a net job creation of around zero, but what impact is inflation playing?
Inflation robs the middle class of their buying power and sends them onto the government dole. Inflation also destroys investment in an economy because savers have no idea what interest rate is necessary to charge to profitably lend out money over an extended period. Inflation causes tremendous economic imbalances, as capital is diverted into ephemeral asset bubbles instead of being allocated in a more viable manner. Still, Fed Chairman Bernanke runs the money printing presses at record rates.
Since 2008, he nearly TRIPLED the size of the Fed’s balance sheet from about 6% of GDP to almost 20% of GDP. By increasing the money supply, the Federal Reserve lowers the value of every dollar that already exists. Take a look at a few of the burdens Americans has had to pick up for failed economic policy:(Consumer Price Index)
- BREAD = 5.6%
- BEEF = 6.8%
- POULTRY = 6.5%
- EGGS = 5.1%
- CHEESE = 8.5% *damn, I love cheese
- COFFEE = 9.0%
- PEANUT BUTTER = 40.7%
- HEALTH INSURANCE = 11.3%
- GASOLINE = 9.0%
- CLOTHING = 4.9%
This is where the middle class is really being attacked. Since the Federal Reserve was established, the value of the dollar has decreased 95%. If Mitt Romney wants to win by a landslide, announce that Ron Paul will be your Treasury Secretary and that the FED will be audited. Inflation is stealing from the working class of America, and should be a crime. This is what John Adams meant when he wrote in 1787, “All the perplexities, confusions, and distress in America, arise, not from defects in their Constitutions or Confederation, not from a want of honor or virtue, so much as from the downright ignorance of the nature of coin, credit, and circulation.”