Central planning and central banks are fundamentally flawed in managing the economy and combating inflation, making hard assets like gold essential for protection against currency devaluation and signaling the need for alternative investment strategies in a changing global landscape.
Central Banking and Economic Policy
Central banks are fundamentally flawed as they attempt to centrally plan interest rates, which is inherently a market function, making them the antithesis of free markets as outlined in Marx’s Communist Manifesto.
The Federal Reserve’s recent rate hike cycle to combat COVID-induced inflation was the fastest and steepest in history, yet proved ineffective due to the US government’s massive debt levels.
The Fed’s Consumer Price Index (CPI) is inherently flawed and manipulated, as it attempts to measure average price increases for 340 million Americans with vastly different individual price baskets.
Debt and Inflation
The US government’s interest expense has already surpassed the defense budget, reaching over $1 trillion, and is projected to soon exceed spending on Social Security and Medicare.
The Federal Reserve is trapped in a cycle of ever-increasing currency debasement, forced to print money to pay interest on the national debt, which has become the primary driver of inflation.
Political Influence and Market Manipulation
The Fed’s rate cutting cycle before elections is politically motivated to inflate asset prices and boost 401ks, revealing their blatant politicization and undermining their credibility.
Raising interest rates sufficiently to combat inflation would risk bankrupting the US government due to its massive debt levels, forcing the Fed to prioritize debt management over price stability.
Long-term Economic Consequences
The Federal Reserve’s policies of money printing and debt growth are creating a ticking time bomb for the US economy, with interest payments set to become the largest item in the federal budget.