no third solution

Blogging about liberty, anarchy, economics and politics

Gold Hits $900 on Pledge to Inflate

January 12th, 2008

Time reports:

[D]riving gold higher was Federal Reserve Chairman Ben Bernanke’s pledge Thursday to cut interest rates to boost the economy, which some fear may be sliding toward recession amid turmoil in the housing and credit markets.

I’ll continue swinging the hammer of economic truth as long as there exist people in the world who believe that printing money out of thin air is capable of creating real wealth. I’ve explained this concept, before. The FED can only lower interest rates by printing more money (or creating it digitally). All other things being equal, an increase in the money supply necessarily leads to increased prices. There’s a term for this monetary phenomenon: inflation. And inflation is a bad thing.

no third solution

Blogging about liberty, anarchy, economics and politics