Don’t rely on the Fed for salvation.
The Problem with Central Banking
It’s no secret that our entire economy is controlled by a small group of individuals who oversee the global financial system. This concentration of power within central banks is not only concerning, but also deeply troubling.
In the past, the gold standard prevented bureaucratic “experts” from manipulating our economy. However, the current system of incentives is flawed. The Federal Reserve, for instance, is tasked with the responsibility of maintaining low inflation and high employment. This used to be the job of legislatures, but now it’s in the hands of central bankers.
Over the weekend, Federal Reserve Chairman Jerome Powell addressed concerns about inflation and interest rates. Many fear that raising interest rates will hinder lending and potentially lead us into a recession. Powell stated that the inflation target is 2%, which is problematic. Over time, a 2% inflation rate accumulates to 100%, making everything more expensive. This deliberate inflation to stimulate consumer spending is not only shameful, but it also fails to generate real innovation.
The Importance of Investment and Innovation
True innovation comes from investment and research and development, not from mindless consumer spending. Buying an extra hamburger today won’t lead to groundbreaking products or services that improve our lives.
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Powell’s guidance on inflation and interest rates can be summarized as uncertainty. The fact that we rely on a group of central bankers to make crucial decisions about our financial future is absurd. We should not be left guessing and analyzing their every move.
There is a natural rate of inflation and interest that should be determined by market forces, not by a centralized authority. It’s ironic that those who advocate for free market principles in other areas of the economy believe that a select group of individuals should control the price of debt. This flawed system creates perverse incentives for legislators to spend recklessly, expecting the Federal Reserve to fix any resulting problems.
The lack of transparency and accountability in the Federal Reserve’s decision-making process is concerning. As investors, we have no say in the matter and are left waiting for Powell’s next move. The fact that there isn’t more public outcry about the excessive power of central banks is baffling, especially considering their track record of incompetence.
It’s important to remember that when a small group of so-called experts claim to have all the answers, they rarely do. We need to question and challenge the authority and influence of central banks in order to create a more transparent and accountable financial system.
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