How the Business Lobby Uses Inflation Hysteria to Influence Washington newrepublic.com - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from newrepublic.com Daily Mail and Mail on Sunday newspapers.
In Episode 3 of the Fox Nation special The Unauthorized History of Taxes , host Bret Baier is joined by prominent guests to examine how the Revenue Act of 1913 fundamentally changed the relationship between taxpayers and the federal government, setting in motion a century-long expansion of centralized power.
Through Prohibition, the Depression and two World Wars, Americans were called upon to finance an ever-growing federal government. In 1913, then-President Woodrow Wilson signed the Federal Reserve Act, establishing the Federal Reserve System as the central bank of the United States in order to provide the nation with a safer, more flexible, and more stable monetary and financial system.
Visualizing The Plunging Purchasing Power Of The US Dollar zerohedge.com - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from zerohedge.com Daily Mail and Mail on Sunday newspapers.
Fiscal Dominance and Fed Complacency SHARE
In his first speech as a member of the Federal Reserve’s Board of Governors, Christopher Waller defended Fed independence and reassured his audience that “deficit financing and debt servicing issues play no role in our policy decisions and never will.” His goal was to dispel the “narrative” that, with massive federal debt and fiscal deficits, the Fed may become subservient to the Treasury. Large‐scale debt monetization could then lead to inflation and a loss of Fed independence.
Waller was adamant that the Fed would not “succumb to pressures (1) to keep interest rates low to help service the debt and (2) to maintain asset purchases to help finance the federal government.” Despite his statement, there may be reason to fear fiscal dominance. As Harvard economist Greg Mankiw warns, “It would be a mistake to put too much faith in the prescience and skill of central bankers.”
What is Purchasing Power?
The purchasing power of a currency is the amount of goods and services that can be bought with one unit of the currency.
For example, one U.S. dollar could buy 10 bottles of beer in 1933. Today, it’s the cost of a small McDonald’s coffee. In other words, the purchasing power of the dollar its value in terms of what it can buy has decreased over time as price levels have risen.
Tracking the Purchasing Power of the Dollar
In 1913, the Federal Reserve Act granted Federal Reserve banks the ability to manage the money supply in order to ensure economic stability. Back then, a dollar could buy