This Blog? It is Done.

I've decided to shut this blog down. Any political content you want to find will be over at my new blog where I'll be posting my views on everything. And some of my stories.

The Rantin' Arkansan

You should follow it. Comment. It'll be fun time.

- Jake

The Federal Reserve is Inhibiting the Economy

I was watching Good Morning America this morning (blame the wife, I can't stand it), and I noticed they were talking about the fact that the Dow Jones Industrial was nearing 13,000 again while the NASDAQ was closing in on 3,000. It got me thinking about the current discussion about the inflation rates currently show through the CPI (sitting at 2.3% right now). Many of the mainstream economists (Krugman, Baker, Wiesenthal, etc) have touted the line that because of this ~2% inflation rate, inflation isn't happening, which is true in a sense. What they seem to fail to realize though, is that for all intents and purposes, the economy should be in a deflationary period, but isn't because of the massive amount of monetary expansion by the Federal Reserve.

The Federal Reserve is inhibiting the economy from washing away the enormous amount of bad money (debt) it has in its system by chasing it with more money. Almost every aspect of the market is inflated. It needs to go through deflationary measures to return to a sustainable rate. The DJI should not be making its way towards 13,000, and the NASDAQ should not be nearing 3,000. This is why so many among the Austrian School warn about inflation, even though we are currently in a stagnant period. If the economy recovers, despite the Fed Res trying hard to stop it, the monetary expansion is going to rear its ugly head and create a staggering amount of inflation, which will be nothing but disastrous for the average citizen.

It isn't really that hard to see once you take a look at the numbers and use a little common sense.