The Federal Reserve was established as a means for regulating the value and dissemination of currency in this country. This entity is powerful and meant to serve a role with the best interest of the country in mind. However, like all positions of authority and power, they can be used to do great amounts of damage as well. A large number of Americans will readily agree that the Federal Reserve is out of control when it comes to keeping the prices on the most basic goods down. These feelings are not just political banter. A close look at the figures can easily start to cause some concern.
Since the FED’s inception, the cost of most goods have increased a staggering 2230 percent. People may cite inflation as the force behind this dramatic rise. However, looking at the behavior of prices over the hundred years prior to their formation will open some eyes. There was a 48 percent decrease in the price of goods before they took control. In essence, the dollar was essentially stable and gaining value before the FED began to intervene. After it comes into power, we start to see destabilization. Part of the reasons behind the change is the inclusion of what is known as “Fiat” money into the system. This recent change saw the expansion of our monetary base between the years 1970 and 2013. It was not until just recently that the system collapsed under its own weight.
Such rapid expansion of the monetary base as the FED has incited is the number one cause of hyperinflation, a trend we are yet to see in full effect. Although, we do see the symptoms in the aftermath of the recent financial crisis. The money base was expanded through the purchase of toxic assets that were the result of the crisis. Through this practice, the country’s reserve ratio remained intact and roughly $1.2 trillion was loaned to over 30 banking institutions throughout the nation. Should this idea of hyperinflation go into full effect, however, the people who are already struggling will be the first to feel the squeeze. These people are the poor and the elderly who are on fixed incomes. The key to preventing this cycle from recurring again and again is to understand how it occurs and lobby your congressman in order that entities such as the FED remain in check.