PrintMarch 15, 2011
Quantitative Easing: Our Tiger by the Tail
Friedrich Hayek's A Tiger by the Tail: The Keynesian Legacy of Inflation was published in 1978. It seems an appropriate description of what Quantitative Easing (QE) has produced. We are far along on a journey that cannot be stopped without enormous damage. Quantitative Easing is a euphemism for money creation. Money creation is, by definition, inflation. Eventually inflation produces higher commodity and other prices. Inflation can be created by other Fed policies besides QE. However, for purposes of this article, QE will be dealt with as if it is the primary cause (which it has been recently). According to Chairman of the Federal Reserve Ben Bernanke, we are in phase 2 (QE2) of "money printing." Those knowledgeable of history find this characterization amusing, because the Fed has engaged in almost continuous money creation from its founding in 1913. Since then, 96% of the dollar's purchasing power has disappeared with much of the loss occurring subsequent to the mid-1970s....(Read Full Article)
