[Citations to come very soon.]
This week, the occasionally entertaining Daniel Indiviglio took it upon himself to negatively connect Ron Paul to Lindsay Lohan because she spoke out about the Fed’s inflation machine on Twitter. Even if Lohan’s tweet was just an ad, the statement she makes is demonstrably correct, and the fact that Indiviglio found it necessary to throw Rep. Paul’s name into the mix is an acknowledgement of the fact that putting the words “Ron Paul” into any web article’s title greatly increases the number of hits. The Internet is indisputably Paul's territory. With that in mind, why wouldn’t establishment shills use his name to promote themselves? After all, it’s not like Paul is even named in the body of the article, meaning the author doesn’t really have to address Austrian economics, business cycle theory, or libertarian philosophy. It’s just too much fun to ridicule those who dare to question the prevailing orthodoxy.
Of substantially greater interest, though, is the unfounded assertion that the Fed has had nothing to do with the rising prices of commodities such as oil and food. The St. Louis Fed’s own numbers show that the dollar’s value has already fallen against other major currencies by 17% since March 2009. As Austrian economist Bob Murphy points out, oil is traded on a world market, and as a result the dollar’s depreciation against other currencies has raised the dollar-price of oil by over 20 percent. The Joint Economic Committee estimates that Fed policy has caused Americans to pay 57 cents more per gallon of gas than they did in late 2008.
Those who attribute the rising commodity prices entirely to real growth and not to the Fed’s monetary expansion are directly contradicted by prominent economists (you know, the ones Lohan should be worshipping). CNBC economist Steve Liesman recently stated that “some Fed officials suggest they could lower commodities prices only by tightening policy and reducing economic growth.” If even those at the Fed admit that raising interest rates will lower commodity prices, then how can it be argued that keeping interest rates artificially low won’t have the opposite effect?
Writing for the Mises Institute, Kel Kelly points out that if increased real demand and strong growth were really causing the movements in commodity prices, and not the creation of new money, the corresponding increase in employment and in the production of goods would cause those prices to fall, not rise. Increased prices of commodities, without monetary expansion, would be offset by reductions in other prices, which hasn’t happened. The government’s and the Fed’s own statistics and media shills can’t even tell a consistent story, let alone a factual one.
The bottom line is that the Federal Reserve is making life harder for American taxpayers, and the only candidate on either side of the 2012 race with the knowledge and the principles to do anything meaningful about it is Ron Paul. Good for Lindsay, though. She’s already managed to outsmart most of the media jokers and several Nobel laureates in economics. Now someone needs to send her a copy of End the Fed.