.. Central bankers neglect the fact that interest rates are prices. Manipulating those prices through credit expansion or contraction has real and deleterious effects on the economy. Yet while socialism and centralised economic planning have largely been rejected by free-market economists, the myth persists that central banks are a necessary component of market economies.
Printing unlimited amounts of money does not lead to unlimited prosperity .. This only sows the seeds for the next crisis ..
The Fed’s response to the crisis suggests that it believes the current crisis is a problem of liquidity. In fact it is a problem of poorly allocated investments caused by improper pricing of money and credit, pricing which is distorted by the Fed’s inflationary actions.
The Fed has made banks and corporations dependent on cheap money. Instead of looking for opportunities to invest in real products that will serve the needs of consumers, Wall Street awaits .. hoping that QE3 and QE4 are just around the corner. It is no wonder that long-term investment and business planning are stagnant.
.. Policy makers focus on spurring consumption, while ignoring production. The so-called capitalists have forgotten that capital cannot be created by government fiat.
.. True prosperity requires sound money, increased productivity, and increased savings and investment .. No amount of monetary expansion can solve our current financial problems, but it can make those problems much worse.