The Federal Reserve causes the business cycle and Ron Paul knows it
- Thread starter Sammysouth
- Start date
The Fed HAD caused the business cycle... until this time.
Virtually no politico acknowledges (or perhaps even understands) why "it's different this time"...
Virtually no politico acknowledges (or perhaps even understands) why "it's different this time"...
Just out of curiosity, you know this how?
No. Prior to the Fed, there were business cycles. But since the Fed.. at least in the USA... the Fed has manipulated the business cycle to promote inflation in such a way as the average citizen didn't notice much.
Normal, self-correcting "supply and demand" would be the business cycle without the Fed. WITH the Fed, it has been orchestrated/manipulated by the supply and cost of credit.
Ultimately this manipulation will lead to the destruction and collapse of America's financial structure... but until then, party on... like it's 1999!
Actually, by lowering interest rates and providing liquidity during downturns and tightening money supply and raising interest rates during upturns the fed smooths out the business cycle. Making the peaks less high and the valleys less low.
How do you figure that the Fed exacerbates the business cycle?
5yr
A little inflation is a very good thing, which is what the Fed and most central banks target. Deflation is an extremely bad thing for a market economy, people will put off purchasing goods/services and the gears will slow or halt.
The is no such thing as a static money supply, even on the gold standard. You still experience inflation/deflation, only no one will be able to counteract it, and would be based on the supply of gold, which would suddenly become much, much tighter.
What would happen to our economy if the value of money rose by 600% in 8 years (which the price of gold has done), that would be deflation unlike anything we have ever seen before. Worse than the 1930s and much worse than Japan.
5yr