Is the Fed an Inflation Fighter or Creator?

I recommend the following article http://www.mises.org/story/1947

Here are the first few paragraphs:

Every few days, a senior Fed official expresses concern regarding the effect of high gasoline prices on inflation. These comments are always phrased in the way a meteorologist would report on the weather, as if the phenomenon in question is an act of nature. Even stranger, these statements imply that only the Fed can hope to save us from this natural disaster.

To invoke another metaphor, this is like the cook who bakes a poison pie and then arrives on the scene of grave sickness, claiming to be the medic with the antidote.

It is the Fed that creates, not cures, inflation. The surest way to stop it is to stop the printing presses—something that a government with massive debt and the desire to sustain a boom is not likely to do.

The Fed’s latest warnings began on September 5, 2005, when the retail price of gasoline climbed to $3.069 per gallon—an increase of 72.6% from early January of this year.

They believe that the decisive factor in the setting of an inflationary spiral is people’s inflationary expectations. This causes workers to press for higher wages. Businesses try to recoup these wage increases by pushing the prices of goods and services higher. This ignites inflation, or so it is believed.

On October 19, 2005, the President of the Dallas Federal Reserve, Richard Fischer, said at a luncheon in Houston, "I will not waver from advocating policy that discourages expectations of higher core inflation. The object will always be to keep inflation at bay, so that the American business machine can keep on humming."

It is inflationary expectations, so they believe, that keep inflation going once inflation is triggered. Also, once expectations are set in motion it is not easy to get rid of them.

Printing more money creates inflation, so they try to control it by varying interest rates, people start borrowing too much and they raise the rates until borrowing stops. can't let things get too bad. Cut off the food and the slaves quit working. Slave management 101. A good master always gives his subject, I mean slave, free food and free medicine so they don't get too weak or sick.

[The Great Owl]

Originally Posted by PJT04

The Fed’s latest warnings began on September 5, 2005, when the retail price of gasoline climbed to $3.069 per gallon—an increase of 72.6% from early January of this year.

http://www.prisonplanet.com/articles...ordprofits.htm

Funny in completely unrelated news (nod, wink), Exxon Mobil just reported a 75% increase in profits.

It's funny how all these so called "economists" and "experts" miss the fundamental point. It's all SUPPLY AND DEMAND!!!!! They can use all the fancy talk and smoke and mirrors, but money like all other scarce resources is bound the the law of supply and demand.

Baron Rothschild figured this out centuries ago, and used manipulation (flooding and then constricting the money supply) to gain controll of most of the real wealth of Europe. Later the agents of the same dynasty did the same thing on a major scale here in America (great depression). Booms and depressions are both 100% caused by the creators of the money for their own benefit. Think about how nice it would be to know a depression is coming next week so you could get your money out of paper and into gold safely tucked away in Europe (Rockafeller, JP Morgan, Joe Kennedy seemed to have miraculous timing in doing just that prior to the depression).

THE THING THAT CAUSES INFLATION IS A SURPLUS ON THE SUPPLY SIDE. Any money added to the market beyond what is backed by real assets or GDP is inflation. The paper frns actually printed has nothing to do with nothing except for velocity which has little to no effect on inflation. The problem is fractional reserve lending. It's a house of cards built on the premise that there's a pot of gold at the end of the rainbow as long as you don't try to look for it.

Originally Posted by The Great Owl

[url] The problem is fractional reserve lending. It's a house of cards built on the premise that there's a pot of gold at the end of the rainbow as long as you don't try to look for it.

YOU HIT THE NAIL ON THE HEAD. A COUPLE OF MY FAVORITE QUOTES:

“If you (Congress) establish this kind of system (Federal Reserve Bank System), you will legalize the means by which depressions and inflations will be created scientifically. We shall have a group of bankers who will sit down together in complete concealment and determine whether we shall have inflation or deflation. They’ll be able to do anything they want. They’ll be more powerful than Congress itself. And ultimately they will make the entire American people their servants and slaves”.-Charles Augustus Lindbergh U.S. Congressman 1913


“This is a staggering thought. We are completely dependent on the commercial Banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the Banks create ample synthetic money we are prosperous; if not we starve. We are absolutely without a permanent money system. When one gets a complete grasp of the picture, the tragic absurdity of our hopeless position is almost incredible, but there it is. It is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it becomes widely understood and the defects remedied very soon.”-Robert H. Hemphill (Credit Manager of the Federal Reserve Bank, Atlanta, Ga.)