Frank Shostak, a scholar at the Mises Institute, asks the same question: where is the price inflation that is supposed to follow the creation of new money? Shostak asks it far more eloquently than I:

According to traditional thinking, a lowering of stimulates the overall demand for goods and services, and this in turn, via the famous multiplier, stimulates general economic activity. Furthermore, according to traditional thinking, massive monetary pumping should also lead to a higher rate of inflation.

That’s what I was taught at Cornell: lower will fool enough entrepreneurs into thinking that the time is right to make new capital investments, thus creating jobs, thus creating demand, thus stimulating the economy, and voila! Problem solved.

Not this time:

Yet despite the massive monetary pumping, both economic activity and the rate of inflation remain subdued. After closing at 8.1% in June 2010, the yearly rate of of industrial production fell to 2.2% in December 2012. The yearly rate of growth of the consumer price index (CPI) fell to 1.7% in December 2012 from 3.9% in September 2009. Additionally, the unemployment rate stood at a lofty 7.8% in December 2012 with 12.2 million people out of work.

The Fed has so greatly increased its interventionist activities that they have frightened off those very job creators. In other words, the Fed’s actions have had precisely the opposite effect. Says Shostak:

The fact that economic activity is currently not responding to massive monetary pumping, as in the past, indicates that prolonged reckless monetary policies have severely damaged the ’s ability to generate real wealth … an increase in does not grow, but rather destroys the economy.

Just how bad are things likely to get? Shostak quotes Mises for the answer:

As soon as the afflux of additional fiduciary media comes to an end, the airy castle of the boom collapses. The entrepreneurs must restrict their activities because they lack the funds for their continuation on the exaggerated scale. Prices drop suddenly because these distressed firms try to obtain cash by throwing inventories on the market dirt cheap.

There is another casualty here as well: thinking. It’s about time.

Opt In Image
Soak Up More Light from the Right
with a free copy of Bob's most popular eBook!

Sign up to to receive Bob's explosive articles in your inbox every week, and as a thank you we'll send a copy of his most popular eBook - completely free of charge!

How can you help stop the Democrat's latest gun grab? How is the deceiving America today? What is the latest administration coverup? Sign up for the Light from the Right email newsletter and help stop the progressives' takeover of America!