I find it hard to believe Ron Paul understands what’s going on when its obvious this guy has no clue.
The Fed is causing inflation under the guise of fighting inflation? What the hell is this supposed to mean? And now is like the 70s because we aren’t on the gold standard? OK, but I guess that means its like the 80s and 90s too.
The rise in oil prices has very little to do with the value of our dollar, and has lots to do with increased demand from China and turmoil in the Middle East. This guy should take a course in basic economics before posting his “insights” on the web for all to see.
I think you seriously underestimate the impact that currency valuation has on commodity prices. The author of this article is right on target when he compares today’s economic climate in the U.S. to the 1970s. Actually, he should be more specific. It’s 1973 all over again, so we haven’t even begun to see the effects of inflation.
The Fed is causing inflation by cutting interest rates allowing banks to put more credit into the economy.
If inflation is any increase in the supply of money not matched by an increase in the gold or silver stock available, the method of inflation just depicted is called credit expansion—the creation of new money-substitutes, entering the economy on the credit market. As will be seen below, while credit expansion by a bank seems far more sober and respectable than outright spending of new money, it actually has far graver consequences for the economic system, consequences which most people would find especially undesirable. This inflationary credit is called circulating credit, as distinguished from the lending of saved funds—called commodity credit. In this book, the term “credit expansion” will apply only to increases in circulating credit.
Credit expansion has, of course, the same effect as any sort of inflation: prices tend to rise as the money supply increases. Like any inflation, it is a process of redistribution, whereby the inflators, and the part of the economy selling to them, gain at the expense of those who come last in line in the spending process. This is the charm of inflation—for the beneficiaries—and the reason why it has been so popular, particularly since modern banking processes have camouflaged its significance for those losers who are far removed from banking operations. The gains to the inflators are visible and dramatic; the losses to others hidden and unseen, but just as effective for all that. Just as half the economy are taxpayers and half tax-consumers, so half the economy are inflation-payers and the rest inflation-consumers.
http://www.mises.org/rothbard/mes/chap12f.asp