MONEY: You, the Fed, and Inflation

http://www.jbs.org/node/1064

You, the Fed, and Inflation
By Llewellyn H. Rockwell Jr.
Published: 1998-11-23 06:00 Economics

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Wall Street remains constantly worried about two forces in American economic life: inflation and deflation. It seems Wall Street worries about inflation on Mondays, Wednesdays, and Fridays. On Tuesdays and Thursdays, it worries about deflation. Or perhaps it worries about both at the same time.

Of course, inflation is one of the most destructive forces in all of human history. In order for an economy to function properly, money must be sound and its value must be honestly gained. For most of human history, soundness and honesty were guaranteed because money was just another name for the most valuable commodity: gold. Gold was ideal as money because it was portable, durable, divisible, fungible, and scarce.

Gold has been money throughout most of our nation’s history, and until well into the 20th century government had little control over its supply and value. But with the establishment of the Federal Reserve in 1913, the foundation of money in gold began to be eroded. Over the decades, the link became progressively less secure, until in 1971 President Nixon did away with the last remnants of the gold standard. If you hid a dollar in a mattress in 1970, today it would be worth less than a quarter of its former value.

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Stunning simple observation of why we as a country are so royally weenied!

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