Did you notice that gas has gone up to $3 a gallon, or that cereal and other food is now more expensive? It’s not big business out to gouge you. It’s the actions of a group of bankers (the Federal Reserve) that do not answer to Congress (or you) when they increase prices (or tax you) by making your money worth less. The Federal Reserve has announced a plan called “Quantitative Easing 2.” This will increase the supply of money. This lowers the value of the dollar and enables America to pay back its creditors easier. NPR explains it in an easy way here.
Some are warning of a 1970’s style malaise as inflation rises. The Wall Street Journal recently discussed all food the companies that are now forced to raise prices, or slash jobs. Commodity prices are rising for a couple different reasons:
- More investors are putting their money in to things that are real. Currency and stocks are essentially paper, but a barrel of oil is produced if a company, currency, or economy disappears or goes bankrupt. So if you have a lot of money, and you need to invest it, put it in to something stable.
- It takes more American dollars to buy something. An ounce of gold is still worth what it was 100 years ago, it just takes more of your money to buy an ounce of gold. If you had a gold coin released by the American government in 1910 that is stamped “$20.00”, you could have taken that coin to buy two nice suits at the time. That same coin can still be used to buy the same two suits in 2010, but it would have to be marked in the 100’s of dollars.
Those that have bought our debt to ensure that our nation keeps the doors open are now accusing a government of a currency war. This video is from a left-leaning outlet called Democracy for America:
At the end of the day, inflation is on its way, and the average American can only do one thing: prepare. The food, tires, clothes, and other goods will be cheaper now than they will be in six months or one year from now. Stock up.
The other thing you can do is educate friends and family now. When the leaders of our nation start blaming Big Oil or Big Food, we need our neighbors and voters to point the finger where it belongs: Congress, the White House, and the Federal Reserve with their reckless spending and destructive economic policies.
End the Fed by Rep. Ron Paul
A podcast on QE2 by the Libertarian Solutions podcast.
QE2 Risks Currency Wars and the End of Dollar Hegemony by Ambrose Evans-Pritchard