A Murray Sabrin email to NorthJersey.com:
Federal Reserve chairman Jerome Powell announced interest rates will be kept near zero even if inflation rises above its 2% target. In other words, the Fed will continue to create money out of thin air. Creating money out of thin air causes price inflation—in goods and services and in assets such as stocks and real estate. Regarding “Fed: Rates to say ultra-low even as inflation rises” (Page 8L, Aug. 28).
Since it was created more than a 100 years ago with a mandate to keep prices “stable” and smooth out the business cycle, the Fed has failed miserably. The US dollar has lost 95% of its purchasing power since 1913, and the Fed’s manipulation of interest rates has caused unsustainable booms that have always ended in painful busts.
In 1977, the Fed’s mandate shifted to “promote effectively the goals of maximum employment, stable prices, and moderate long term interest rates”. In short, the Fed has in effect become a central planning institution. Moreover, the Fed has decimated the return on savings for retirees and others who depend on income from their money market accounts and other financial instruments.
Instead of letting interest rates be determined by supply and demand in the financial markets, the Fed assumes it can “manage” one of the most important “prices” in the US economy.
Finally, consumers, especially low and moderate-income families, will be harmed further as price inflation will accelerate. The Fed, in short, is an “enemy of the people”.
Murray Sabrin, Ph.D.
Professor of Finance, (ret.)
Sabrin Center for Free Enterprise (founder)
Ramapo College of New Jersey
author, Why The Federal Reserve Sucks:
It Causes Inflation, Recessions, Bubbles and Enriches the One Percent
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