http://www.thefreemanonline.org/departments/the-fed-sets-interest-rates-it-just-aint-so/ Ideas on Liberty Wed, 15 Feb 2012 04:40:14 +0000 hourly 1 http://wordpress.org/?v=3.3 http://www.thefreemanonline.org/departments/the-fed-sets-interest-rates-it-just-aint-so/comment-page-1/#comment-22821 Steven Hankin Thu, 25 Feb 2010 18:29:21 +0000 http://www.thefreemanonline.org/uncategorized/the-fed-sets-interest-rates-it-just-aint-so/#comment-22821 This article asserts that: "The Fed funds rate, that Fed policy can influence through its monopoly over the quantity of money,is inconsequential in shaping most short-term and long-term rates in capital markets, unless that moneymaking power subsequently promotes a pervasive price inflation." I think this begs the question as to what constitutes "prevasive price inflation." Since inflation (i.e, devaluation of our money) is just a cause of price increases and not the price increase, itself, I assert that even where prices are dropping by reason of the basic laws of supply and demand (too much supply and/or to little demand for a good or a service), inflation presessure can still exist. Thus,in the absence of such inflationary pressure, prices would drop even more. So, if the FED has materially expanded the money supply, as it has been doing, does this not present a "pervasive price inflation." If so, would this embedded inflation not have a substantial effect on all interest rates? This article asserts that: “The Fed funds rate, that Fed policy can influence through its monopoly over the quantity of money,is inconsequential in shaping most short-term and long-term rates in capital markets, unless that moneymaking power subsequently promotes a pervasive price inflation.” I think this begs the question as to what constitutes “prevasive price inflation.” Since inflation (i.e, devaluation of our money) is just a cause of price increases and not the price increase, itself, I assert that even where prices are dropping by reason of the basic laws of supply and demand (too much supply and/or to little demand for a good or a service), inflation presessure can still exist. Thus,in the absence of such inflationary pressure, prices would drop even more. So, if the FED has materially expanded the money supply, as it has been doing, does this not present a “pervasive price inflation.” If so, would this embedded inflation not have a substantial effect on all interest rates?

]]> http://www.thefreemanonline.org/departments/the-fed-sets-interest-rates-it-just-aint-so/comment-page-1/#comment-22809 Bernanke Says Low Rates Here to Stay | The Freeman | Ideas On Liberty Thu, 25 Feb 2010 13:32:07 +0000 http://www.thefreemanonline.org/uncategorized/the-fed-sets-interest-rates-it-just-aint-so/#comment-22809 [...] Timely Classic “The Fed Sets Interest Rates? It Just Ain’t So!” by Richard H. [...] [...] Timely Classic “The Fed Sets Interest Rates? It Just Ain’t So!” by Richard H. [...]

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