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Some Federal Reserve officials are calling for tougher banking regulations in order to prevent the Fed’s low interest rate policy from leading investors to take “excessive” risks that will create asset bubbles.Regulators are subject to having the same Fed-induced distorted view of the marketplace as nearly everyone else. Thus, regulators may mistake a growing asset bubble as a thriving sector of the economy that will serve as a long-term source of growth. This is especially the case if, as with the housing bubble, government policies such as the Community Reinvestment Act encourage the malinvestments. Also, regulators may impede the growth of businesses that are actually responding to real economic conditions instead of Fed-created illusions.
Support among the people, if not among the financial and political elites, for auditing and even ending the Fed, as well as FOR cryptocurrencies and precious metals, suggests we may soon reach what Ludwig von Mises referred to as the “crack-up.”
The crack-up occurs when enough people realize that continuous expanding of the money supply, and the accompanying decline in a currency’s purchasing power, is a feature of central banking. Therefore, they spend their money as soon as they get it, accelerating the rise of hyperinflation.
Concerns over the effects of the US government’s debt, the precarious American economic condition, and growing resentment of US foreign policy have led to a decline in the dollar’s international value. Eventually, these factors will lead to a rejection of the dollar’s world reserve currency status.
Rejection of the dollar’s reserve currency status abroad and the crack-up at home will cause an economic meltdown worse than the Great Depression. Among the problems this will lead to is increased violence as some Americans who believe they are entitled to live off the stolen property of others cut out the government middleman and start stealing from their fellow citizens.
The only way to avoid this fate is to spread the ideas of liberty among the people. A strong liberty movement that can pressure politicians to cut spending, audit and end the Fed, legalize competing currencies, and stop promoting divisive identity politics is the key to peacefully transitioning away from the Keynesian welfare-warfare state to a free society.
Our thanks to Ron Paul and the Ron Paul Institute for his unwavering support of common sense. -Editor