Right, and how is that going for them? The average home cost around $3,400 in 1913 (when the FED was created), and today is around $200,000. And $1 is still worth $1.
It's actually going very well for the US. Inflation has been been low and stable. The real economy is larger than it's ever been. Unemployment is very low. Out of all the countries and currencies on Earth over the past 100 years, the US and its dollar have had a better track record than almost any other.
A few corrections to some possible misconceptions:
(1) Fed is short for Federal Reserve. It's not an acronym.
(2) The goal of the Fed is not 0% inflation. Because downside risks are worse than upside risks, the Fed's explicit long-term target is 2%
(3) House prices aren't great to use as a metric of inflation. A house built today is far, far better than house built in 1913. According to the consumer price index, $3,400 in 1913 has the rough buying power of $88,000 today.
In my opinion, if you want to make a serious argument against the Fed, you should (a) do more work than rhetorically asking how the past century has gone for us, and (b) at least be familiar enough with the thing to spell its name correctly.
Thanks. I am well aware of all the things you pointed out. I think we just have a different opinion of what stable is or should be.
I think a currency that has $1.00 worth of purchasing power when I am given it should not lose 99% of its value over the next 100 years if I do not spend it. I am aware that that is impossible due to inflation, and that is why things like gold are much better stores of value than the dollar.
This is really the fundamental disagreement: what is money? Is it a store of value or a medium of exchange?
Until or unless agreement is reached on that, debating other points is kind of a waste of time. You're not going to agree if you disagree on the fundamental goal of money.
I've personally gone over to the Keynesian/Monetarist side. IMHO the most important idea of Keynes by far is monetary velocity: that wealth is a verb, not a noun. To be wealthy is to have much activity. The desire for idle stores of wealth reflects a very deep and very ancient wish for a stability that does not exist in this world. In this world things are either alive, moving, and changing, or dead.
Austrians want "hard money" that can act as an inert store of value for the same reason the Egyptians elaborately mummified their dead and piled vast stores of wealth in tombs. It's a very ancient and unfortunately very misguided quest for immortality through stopping of avoiding time. It doesn't work. The mummies were just corpses, the tombs were raided, and with enough time the pyramids will be dust.
If there is ever any kind of immortality to be had, it will be by embracing change and using science and technology to modify our biology or even transfer consciousness and intelligence itself into another medium ("mind uploading"). Those kinds of sci-fi things would require immense technological progress, and that's far more likely to occur in a world of dynamic economic systems biased toward investment rather than stuffing money into mattresses.
Thank you. I think you are right. I think it’s impossible to reach any sort of consensus when two groups have fundamentally different views.
I’m going to just try to stay out of it from now on. Not worth the time or energy. Especially when my view is the minority view.
FWIW I don’t believe it is any sort of quest towards immortality. My biggest problem is how Keynesian economics tends to favor the central banks who are able to create money out of nothing.
Are you planning to hold on to that dollar for a hundred years?
Do you think you'll be alive then?
Do you not think that perhaps if you want it to maintain or grow its value you should put it to work, rather than just sitting on it?
Why should society value whatever it is you did to earn a buck today the same in 100 years?
I understand that that is the driving force behind Keynesian economics, and I think you have a valid point.
That said, when you consider the way inflation actually works most of the new money pumped into the system disproportionately benefits big businesses and banks at the expense of the rest of the population. It is essentially a hidden tax on the rest of us.
Central banks pumping more money into the economy actually helps them because it equates to more interest payments they can collect and puts more people and governments in their debt. Also they don’t have to do any work to create the money so could you explain how that is considered a fair system?
Some elite bankers are able to just summon new money out of thin air to serve their interests but money that I worked hard to earn is going to lose its value if I hold onto it for too long?
Why do you think there is such a huge gap in income inequality that began as soon as we broke off completely from the gold standard in 1971?