Published Thursday, February 28, 2008 by Tim Swanson
Many economists since Mises have noted that every time the Fed manipulates interest rates it creates bubbles of malinvestment. In addition to reallocating scarce resources in inefficient ventures, one of the problems with artificially lowering interest rates is that, ultimately, someone has to pay for these subsidies.
As with every freebie provided by the government, some faceless individuals will ultimately share this unjust burden. And over the course of the Fed's more-than-90-year existence, individuals with dollar-denominated assets have borne the brunt of this devaluation as the dollar is worth about 5% of its original 1913 value.
(Original Text)
No Silver in the Silver Lining (2.15 MB)