“Providing emergency prices for American families and defeating the life crisis” is one of the many presidential orders issued by President Trump in an elliptical office. The Presidential Ordinance instructed the federal agency to provide an “emergency price” to the American people by reducing or reducing the supply of federal regulations on medical, housing, energy, other products and services and services. I am doing it.
Abolishing regulations is an effective way to reduce the cost of the affected industries and increase the supply. However, the rise in prices caused by regulations is unique to sector. The rise in the economy as a whole is caused by the Federal Reserve.
A wide range of price rise is the result of inflation. Inflation occurs when the central bank increases interest rates by increasing money supply.
President Trump spoke on a video on Thursday before the annual meeting held by the World Economic Forum in Davos, Switzerland, and immediately met Jerome Powell, the chairman of the Federal Reserve, to deal with high prices. He stated that he would “demand” Fed reduction interest rates to help. If you invest more money by the economy, some consumers may give some temporary backing of purchasing power, but the long -term impact of reduction is that the inflow of new money loses the value of the dollar. It is further erosion of American living standards.
The short -term advantage of increasing money and reducing interest rates is mainly wealthy because it receives new money before other Americans. Therefore, before the Fed inflationy of the Fed, they are enjoying the improvement of purchasing power.
Interest rates are the price of money. As with all prices, interest rates inform the market stakeholders about the market status. When the central bank operates interest rates, the signals sent to the market are distorted, causing misdelivery of resources. The result is a “bubble” that creates a short -term boost between employment and income. However, the bubble ultimately bursts and causes a recession. Just as the middle -income and low -income Americans suffer from the rise in the federal preparation system, they are the main casualties of the economic recession under the federal preparation system.
Congress and Federal Preparatory System are the best that can be done when the bubble bursts. A recession is required to remove the distortion caused by the simple monetary policy of the Federal Reserve. Of course, parliament and federal preparation systems refuse to take wise roads, albeit politically difficult. Instead, they set the next bubble stage through “stimuli” spending and low interest rates.
President Trump argues that he knows more about interest rates than Jerome Powell, chairman of the Federal Reserve. Whether President Trump's experience in real estate development (a very sensitive business of changes in interest rates) has become an interest rate expert than Powell's chairperson next to the point. Politicians, bureaucrats, or Central Bankers cannot know the right interest rate. The only way to know the correct interest rate is to enable individuals acting in the free market to set interest rates.
Despite the misunderstanding of monetary policy, President Trump has publicly criticized the federal preparation system. President Trump needs to track his criticism of the Fed by working with Congress to pass the Fed Bills and Laws to audit.
Restoring the free market with money is the key to fulfilling President Trump's first pledge to bring a new golden age.
Ronpaul is a former US member of the United States from Texas. This article was originally published in the Lonpaul Research Institute for Peace and Prosperity, and has been reprinted here with permission.
