If you want to bring out the snowflake in monetary types, make a case that the Fed doesn’t cause inflation. Comical here is that the very monetary obsessives who’ve said for decades that the dollar has lost 90%+ of its value since the creation of the Fed, get very defensive when it’s said they imagine (incorrectly) that the Fed is the fix for inflation. If it’s not the fix, how can it be the cause? They have no answers, which means the myths grow.
Some claim central banks create “inflation” through “money printing” of “too much supply,” but if that were the case, inflation would result in money disappearing, not a surge in the various monetary aggregates that they study endlessly. Junk currencies are soon enough not currencies. “Money printing” is the path to a currency’s disappearance contrary to conventional wisdom.
Others imagine the Fed acting as croupier, matching supply and demand of dollars, yet they can’t explain why currencies from the 17th, 18th and 19th centuries were so stable (government bonds paid out over 100 years) despite no open market operations from central bankers.
The simple truth is that inflation is born of a lack of a standard. Without standards, money loses value not because it’s circulating too much, but because it circulates in lesser and lesser amounts. The theories are all wrong. To erase inflation, adopt standards. Nothing else works.
Read the full article at Forbes.