In today’s WSJ (“The Federal Reserve is causing turmoil around the world“), George Melloan, a former columnist and deputy editor of the Wall Street Journal editorial page, provides insightful commentary on the dangers to the US economy and world stability that are consequences of the current Fed inflationary policy. While not advocating elimination of the central bank, he provides a strong voice of support for current hearings going on under the guidance of Representative Ron Paul.
A highlight:
“The Fed is financing a vast and rising federal deficit, following a practice that has been a surefire prescription for domestic inflation from time immemorial. Meanwhile, its policies are stoking a rise in prices that is contributing to political unrest that in some cases might be beneficial but in others might turn out as badly as the overthrow of the shah in 1979. Does any of this suggest that there might be some urgency to bringing the Fed under closer scrutiny”?
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The best thing in this article is this nugget of Iranian history of which I was unaware: “The turmoil in Iran is reminiscent of another period when the Fed was on an inflationary binge, the late 1970s. The Iranian oil boom had brought many thousands of peasants out of the villages into the cash economy in population centers like Tehran. On top of the disorientation resulting from that change itself, Iranians were then victims of an outbreak of inflation and a sharp decline in the purchasing power of the rials in their pay envelopes. Confused and angry, they supported the clerical revolution that unseated the shah and has been a thorn in America’s side ever since.”
A thorn in the side of America … or a convenient bogeyman and scapegoat. Inflation is the gift that keeps on giving (to the inflators).
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