Counterfeiters and Train Wrecks

Stripped of its fancy terminology and confusing mechanics, modern central banking boils down to a legalized counterfeiting operation. If there were suddenly a widespread public outcry to “punt the press,” we can bet our hypothetical monarch would mobilize all his allies in the media to discredit the people threatening his source of revenue. In that light, we can understand the reaction today to people calling to “end the Fed.”

via The Fed as Giant Counterfeiter – Robert P. Murphy – Mises Institute.

This is a lucid, correct, and easy to follow explanation. Of course, supporters of the system can argue that while the description is correct, it is not the bad thing it sounds to be – there are social benefits to this operation. Besides, every nation does the same thing, so you’re better off using the counterfeiter who shows some strength and temperance. In other words, keep your money in dollars. That’s probably good advice if you insist on holding currency instead of hard assets. But the core of the problem is that the “benign inflation” strategy for national economies acts as a drag on prosperity and wealth creation. And, should the central bankers get it wrong, the economic drag becomes a train wreck.

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