Twerking was recently added to the Oxford Dictionary (R.I.P. English): “to dance to popular music in a sexually provocative manner involving thrusting hip movements and a low, squatting stance.” See Miley Cyrus.
According to my pop culture-following friends, no one really knows who she is anymore. Starting out as the innocent Hannah Montana, now a trashy version of her former self, performing a VMA routine that makes even the hippest hipsters cringe. But the media can’t get enough of her. People are hooked on this type of news apparently. A drug with no rehab available for our 24-hour news cycle.
Oddly, this sounds similar to another issue: monetary policy and our Federal Reserve (“Fed”). From Wall Streeters to Main Streeters, no one knows what’s going on with that institution, with its thrusting influx of easy cash (quantitative easing), followed by a low-squatting yet obstinate stance on excessive abuses of the yield curve. It’s neither public nor transparent. Sophisticated economist and industry insiders wait helplessly, hinging on every word from Fed Chairman Ben Bernanke and the release of its private meeting minutes.
Now, if you made it through the last paragraph, stay with me. Our millennial generation has the best opportunity to understand and correct our broken monetary system and supposedly the most “educated” workforce. We can’t continue in this direction. We can’t continue with the Fed in control of our market prices. We need a free price market system.
Controlled and manipulated prices necessarily bring inflation. Inflation is an increase in the cost of goods and a decrease in how far one dollar will take you. If it costs you three dollars today to buy a gallon of milk, it may be $3.25 next year or $3.50 the next. If your income is stagnant, then you have less money to spend on other things and less money to save or invest or pay student loans.
But we don’t like that, so we demand higher wages to suit our spending and mirror inflationary outcomes. Our poor and working poor, the most harmed by inflation, must receive higher assistance, higher minimum wages and now, apparently, a living wage. Our middle class can’t afford to send their kids to college without mounds of debt, can’t afford groceries for their family of four, can’t afford a mortgage and can’t afford a simple night out to build family relationships. The wealthy and politically connected are most benefited by inflation of course.
The Fed’s mindset is equivalent to seeing Miley’s VMA performance and saying, “She should host the Oscars, Golden Globes and all the other ‘look at me’ celebrity events every year.” While most would probably agree that’s an awful idea, we never flinch when we hear a two percent inflationary target per year is “right on track.” Sure, enjoy that hyperinflation.
Surprisingly, price deflation can and should happen — wages can fall if the price of goods and services falls. Yet our system doesn’t crash when this occurs. In fact, during a recession, it filters out the misallocation of resources and poor investments made during hyperinflationary periods. Only government or Fed twerking can prevent those good outcomes.
So why do we let the Fed continue to print money that will not only directly lead to hyperinflation, but also ensure we continue to have fewer opportunities for our future? Fewer opportunities for millennials paying down our debt because we can’t afford basic needs and wants. Fewer opportunities to start our own businesses or take more risks.
Start learning what the Fed is and does. It may surprise you. If history is any indicator, the Fed has done a terrible job. Your economics professors aren’t telling you this.
Yeah, they say that the Fed makes sure banks have capital and liquidity and preserve purchasing power, and “saves” our system from systemic risk. But since its inception in 1914, we’ve hardly seen any of these things. Just two years after 1914, consumer price inflation soared.
Along with new financial regulations we keep passing, we should be fine … sigh. A John Maynard Keynesian view of economics produces an abysmal record. A failed record. But you’d never hear that from Keynesian supporters of course (I’m talking to you, Paul Krugman). Bernanke knows that with this much U.S. debt, inflation is the only savior to help mask the debt burden.
But not one Keynesian economist mentions the depression of 1920-21, when President Harding dramatically decreased government spending (70 percent) and the Fed actually raised rates — contributing to a speedy recovery: a 2.4 percent unemployment rate by the end of 1922.
Start supporting measures to audit the Fed. If anything, to see what’s up with all their balance sheet twerking. If you want a more secure future, the answer doesn’t involve continuing to let the Fed run our system, giving our politicians a bottomless and secret piggy bank, so you end up with less money to go see Miley twerking live.
