End the Fed… And Replace It With What?

We need to end the Fed.

The Federal Reserve makes interest rates artificially low to encourage lending. This is popular in the short term because people can buy more stuff, but it inevitably leads to massive bubbles.

The Fed has a 2% inflation target, but since it completely abandoned the gold standard in 1971 inflation has averaged around 3.9% per year, which may not sound like much, but it’s a cumulative price increase of 600%. And the only reason it isn’t higher, despite a massive increase in the money supply, is because velocity has been decreasing.

Velocity is the “rate at which money is exchanged in an economy.” A low velocity indicates “a general reluctance to spend money.”

Once countries who use the dollar as their reserve currency start to lose faith in the dollar’s ability to retain its value…