{"id":45449,"date":"2013-12-16T10:13:26","date_gmt":"2013-12-16T15:13:26","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/?p=45449"},"modified":"2013-12-16T07:14:10","modified_gmt":"2013-12-16T12:14:10","slug":"federal-reserve-100-years-destroying-purchase-power-money","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2013\/12\/16\/federal-reserve-100-years-destroying-purchase-power-money\/","title":{"rendered":"Federal Reserve: 100 Years of Destroying the Purchase Power of Money?"},"content":{"rendered":"

By Michael Lombardi, MBA<\/a><\/span><\/strong><\/p>\n

Nearly 100 years ago, on December 23, 1913, the Federal Reserve was created. The central bank was created for many reasons, such as minimizing the impacts of panics, becoming a banker of last resort and \u201csmoothing\u201d economic cycles.<\/p>\n

But along the way to keeping the monetary system stable, something happened: the value of money deteriorated.<\/p>\n

What you could buy for $1.00 in 1913 costs $23.59 today. (Source: Bureau of Labor Statistics web site, last accessed December 11, 2013.) A simple calculation would show that prices have increased by 2,259% over the last 100 years.<\/p>\n

Something else to ponder: there have been more erratic movements in inflation since the Federal Reserve was created than in the century prior to then, when the Fed didn\u2019t exist! Since the Federal Reserve was born in 1913, there were 10 years when inflation in the U.S. economy came in at more than 10%. Between 1800 and 1912, there were only four years when inflation in the U.S. was greater than 10%. (Source: Federal Reserve Bank of Minneapolis web site, last accessed December 11, 2013.)<\/p>\n

\u201cWhat\u2019s your point, Michael?\u201d<\/p>\n

The unprecedented amount of paper money the Fed has created (out of thin air) since the Credit Crisis of 2008 will come back to haunt us\u2014that\u2019s my fear.<\/p>\n

The Federal Reserve\u2019s balance sheet has grown to about $4.0 trillion. M2 money stock, that\u2019s the supply of paper money in the U.S. economy, has gone up 27% since 2009. (Source: Federal Reserve Bank of St. Louis web site, last accessed December 11, 2013.)<\/p>\n

And through its \u201cquantitative easing\u201d program, the Federal Reserve continues to print $85.0 billion per month in new paper money with no end in sight. On top of this, it\u2019s kept interest rates artificially low for years.<\/p>\n

All this \u201cprinting\u201d will eventually devalue the U.S. dollar and further destroy the buying power of Americans. Our lesson in history has been that the more dollars in circulation, the less those dollars buy. Sure, the official numbers don\u2019t show there\u2019s a problem with inflation (yet), but ask the average American Joe, and he won\u2019t tell you his cost of living is going down.<\/p>\n

We are living in unprecedented times. We\u2019ve never had a situation in which the Federal Reserve printed so much new money. Many people are unfazed by this because it doesn\u2019t really make a difference in their everyday life\u2026right now.<\/p>\n

But two serious risks have developed: 1) the stock market has become so dependent on the \u201ceasy money\u201d policies that prevail today, that should the money printing stop or be significantly tapered, the market could crash; 2) inflation is \u201cchomping at the bit.\u201d Yes, I understand the \u201cofficial\u201d figures don\u2019t show it, but by the time they do, it will be too late. The damage will already be done.<\/p>\n

Bottom line: be very cautious about the stock market and prepare for some serious inflation.<\/p>\n

\n

This article Federal Reserve: 100 Years of Destroying the Purchase Power of Money?<\/a> is originally publish at Profitconfidential<\/a><\/p>\n

 <\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

By Michael Lombardi, MBA Nearly 100 years ago, on December 23, 1913, the Federal Reserve was created. The central bank was created for many reasons, such as minimizing the impacts of panics, becoming a banker of last resort and \u201csmoothing\u201d economic cycles. But along the way to keeping the monetary system stable, something happened: the … <\/p>\n

Continue reading “Federal Reserve: 100 Years of Destroying the Purchase Power of Money?”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-45449","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts\/45449","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/comments?post=45449"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts\/45449\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/media?parent=45449"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/categories?post=45449"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/tags?post=45449"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}