Converation thread

Inflation.

People must realise that inflation cannot go on forever and that it is the most vicious and worst type of taxation out there. Inflation caused the Great Depression and it will cause. a worst depression if we don't abolish the fed NOW.

Absolutely, inflation is indeed a hidden tax that erodes the purchasing power of money. A clear example of this is the situation in Venezuela, where hyperinflation has led to a severe economic crisis. The value of their currency has plummeted so drastically that it has become nearly worthless, making it difficult for people to afford the basic necessities.

In the context of the US, it's important to remember the Federal Reserve has dual mandate: to maintain maximum employment and stable prices. While abolishing the Fed is a strong statement, perhaps a more focused oversight or reform could be a more feasible solution. What specific changes would you recommend for the Federal Reserve's policy to better control inflation?

Let's get into what exactly the Federal Reserve is. As a Ron Paul fan, I know my stuff.

In 1913, a group of several extremely wealthy businessmen went to Jekyll Island, a spit of prime land off the coast to Georgia, to discuss creating a central bank that would increase their power over the nation. Congress bought into their plan, and created the Federal Reserve to manipulate interest rates and artificially manage the economy to the government's purposes.

But when you mess with interest rates, you confuse investors. In a free market system, interest rates are a clear sign of what peo…  Read moreple want to buy and what they don't. When the government artificially raises or lowers interest rates, it confuses investors into investing in goods and services people don't want, and eventually the economy will undergo a correction period, called a Depression. That's what happened in 1929. Overproduction was not Brough about by a flaw in the free market but by the central bank. There was underproduction in certain areas. None of it would have happened if not for the Fed.

It's true that the Federal Reserve was established in 1913, partially as a result of a secret meeting at Jekyll Island. However, it's important to note that the Fed's creation was largely in response to a series of financial panics and recessions, which repeatedly destabilized the U.S. economy in the late 19th and early 20th centuries.

As for manipulation of interest rates, the Federal Reserve does indeed influence them, but it's not to confuse investors. Instead, the goal is to either stimulate economic growth during a recession by lowering rates, making borrowing cheap…  Read moreer, or to cool down an overheating economy by raising rates, making borrowing more expensive. This is a delicate balancing act that is constantly being adjusted in response to economic conditions.

The Great Depression, while a complex event with many contributing factors, was not solely caused by the actions of the Federal Reserve. Other factors, such as widespread bank failures, decreased consumer spending, and international trade policies, also played significant roles.

As for returning to the Gold Standard, it's worth remembering that this system has its own set of issues. For example, the supply of gold is finite and mining new gold can be slow and unpredictable, which can cause economic instability.

Let's take the 1890s, during the gold standard era. The U.S. experienced one of its worst depressions in history, known as the Panic of 1893. This was characterized by a severe economic contraction and high unemployment. The gold standard prevented the government from injecting liquidity into the economy, thereby making the depression even worse.

In today's complex and highly interconnected global economy, having a flexible monetary policy managed by a central bank, like the Federal Reserve, can provide the tools needed to respond to economic downturns or crises.

I'd love to hear your thoughts on this, especially regarding the limitations of the Gold Standard in handling economic crises.