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As Electric Vehicle Prices Decline, Will the Federal Reserve Step In?

A front page story in the Wall Street Journal last week carried the headline “EV Prices Are Being Slashed, Testing Appetite of Consumers.” Inside the headline, it was reported among other things that “Many electric models have never been cheaper” and that electric vehicles “are among the biggest bargains on the dealership lot.”

Should the Fed step in? If the question appears flippant, that’s because it is. But it’s also a reasonable question given the view expressed by AEI’s Paul Kupiec, the Mises Institute’s Alex Pollock and other central-bank watchers that the Fed allegedly exists to maintain “stable prices.” To be clear, the idea that an entity of government should be empowered to maintain “stable prices” insults foolish given the importance of pure price signals to progress, but this is what the experts believe.

Paul Krugman thinks much more important than “price stability,” the Fed must ensure that prices never fall. He writes that “Imposing significant deflation on a modern economy leads to very high unemployment.” About Krugman’s droolings, before conservatives settle into resting smug face, they would be wise to remember that Milton Friedman and his disciples have long contended against all reason that the Federal Reserve’s failure to “print” (whatever that is) or increase so-called “money supply” brought on the “deflation” that caused the Great Depression.

Read the entire article at Forbes

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  • John Tamny

    John Tamny is a popular speaker and author in the U.S. and around the world. His speech topics include "Government Barriers to Economic Growth," "Why Washington and Wall Street are Better Off Living Apart," and more.

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