The economically illiterate citizenry believes what they are taught in school and told by the media and that is that the Federal Reserve is the stabilizer of the economy. What is stabilizing about the Fed actions?
Take a recent example: Last week (reported on November 2, 2007) the Fed cut the interest rate by a quarter point and couched it in a warning about inflation so the Dow Jones goes up 137 points one day and then plummets 362 points the next day. How wonderful to have the stabilizing influence of the Fed!
The false signal deliberately generated and sent by the Fed caused a brief frenzy for scarce capital but printing money and pumping it into the economy through the favored credit outlets is not real capital. And so 'Poof' - the illusion disappears!
Combining the warning of inflation with the cutting of the interest rate potentially is a rational statement however the Fed always portrays inflation as external to itself and actually uses rhetoric to blame the consumers for inflation. This distortion and complete reversal of cause and effect is deliberate and deceitful just like all shams.
The indoctrinated belief (promulgated by the government funded education system) that the Federal Reserve is a stabilizer of the economy is a complete fallacy. The actions of the Fed are the sources of inflation and the actions of the Fed send false signals in the market causing overconsumption and malinvestment.
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