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The Federal Reserve
Open Market Committee (FOMC) has made it official: After its latest two day
meeting, it announced its goal to devalue the dollar by 33% over the next 20
years. The debauch of the dollar will be even greater if the Fed exceeds its
goal of a 2 percent per year increase in the price level.
An increase in the
price level of 2% in any one year is barely noticeable. Under a gold
standard, such an increase was uncommon, but not unknown. The difference is
that when the dollar was as good as gold, the years of modest inflation would
be followed, in time, by declining prices. As a consequence, over longer
periods of time, the price level was unchanged. A dollar 20 years hence was
still worth a dollar.
But, an increase of 2%
a year over a period of 20 years will lead to a 50% increase in the price
level. It will take 150 (2032) dollars to purchase the same basket of goods
100 (2012) dollars can buy today. What will be called the
“dollar” in 2032 will be worth one-third less (100/150) than what
we call a dollar today.
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Read the rest of the article at
Forbes
