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Who is Responsible for Inflation?

Walter Williams explains the difference between counterfeiting and monetary policy. He explains that “inflation results from an increase in the supply of money relative to the demand for money.” He asks who, then, is responsible for inflation? In the United states, who is able to create money? The answer, of course, is the Federal Reserve System, and they’re creating it by the bucketful. Williams asks whether we really need our central bank, and answers his question with a history lesson. He makes a recommendation how to get ouy of the trouble we’re in.

Read this fine article in the Washington Times at Counterfeiting vs. monetary policy.

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2 Comments

  1. Rothbard December 19, 2008

    Bravo Bob/Walter. That is striking at the root.

    Without this ability to tax/steal via inflation the fedguv wouldn’t be the out-of-control entity it is today. Commodity money is a restraint on government. That is why it is demonized and called a “barbarous relic” by government officials and crony capitalists.

    I’ve heard it said that the average lifespan of an unbacked paper (fiat) currency is roughly 30 years. The Federal Reserve Note (FRN) has been 100% unbacked since August 1971. The FRN is living on borrowed time. Are you feeling lucky?

  2. Joe Williams December 19, 2008

    Central Banks are just a mill house of legalizing counterfeiting.

    Is the FRN fiat? Yes, it was removed off the gold standard, but I believe it was replaced by another commodity to back it up, and that is oil. You will find it strange to know that the USA reached peak oil production in 1971 and has been tapering down since.

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