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Federal Reserve's Hidden Cost
00:04:14
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| Hello everybody and thank you for tuning in to the weekly report. | |
| The Federal Reserve, Enemy of American Workers. | |
| According to numbers released by the U.S. government, consumer prices have increased by 7.5% in the past year, the steepest increase since 1982. | |
| The actual price increases are even worse than the government numbers suggest, given that the official statistics are manipulated to understate the real rate of price increases. | |
| According to John Williams of Shadowstats, prices have actually increased by around 15% over the past year. | |
| The fact that prices remain at historically high levels shows that inflation is far from transitory, as Federal Reserve Chairman Jerome Powell had described it. | |
| The continuing inflation has led the Federal Reserve Board to suggest the Fed will start increasing interest rates earlier than previously announced. | |
| The Fed may also break with its practice of only raising rates by 25 basis points at a time and increase rates by increments of up to 50 basis points. | |
| However, the increases the Fed is discussing would still leave interest rates at historic lows. | |
| Thus, such interest rate increases would do little or nothing to ease the pain rising prices cause for average consumers. | |
| Most policy experts and politicians, including President Biden, support interest rate increases to deal with inflation. | |
| However, opponents of rate increases fear that increasing interest rates will slow economic growth, increase unemployment, and depress wages. | |
| These progressives believe the old fallacy that workers benefit from easy money. | |
| The truth is workers are inflation's main victims. | |
| Workers may see their nominal pay, pay adjusted for inflation, increase while the Fed-produced price increases cause real wages to plummet. | |
| This increases the elite's purchasing power, further income inequality. | |
| The Federal Reserve's creation of new money does more than erode the value of the currency. | |
| It also artificially lowers interest rates, which are the price of money. | |
| This distorts the signals sent to market actors, leading to investment decisions that do not reflect the real conditions of the market. | |
| The result is a temporary boom, followed by a bus. | |
| Workers who find new jobs in the boom lose their jobs in the bus. | |
| These workers are then not just unemployed. | |
| They also are often saddled with unmanageable debt incurred during the low interest rates, easy money phase of the business cycle. | |
| Progressives could help workers by joining the movement for market-based money. | |
| Free market money will be safe from government manipulation and thus its value will remain stable. | |
| A step toward restoring a free market monetary system is letting the people know the truth about the Federal Reserve by passing audit the Fed. | |
| Another step is legalizing alternative currencies by repealing legal tender laws and ending all capital gains taxes on precious metals and cryptocurrencies. | |
| Congress must also begin to cut spending, starting by making major cuts in our $750 billion military budget and ending all corporate welfare. | |
| The money benefits financial and political cities at the expense of working people whose standard of living is eroded by the Federal Reserve action. | |
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Working Man's Friend
00:00:12
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| As a Texas labor leader once told me, Gold has always been the working man's friend. | |
| I would add that fiat money is the worker's foe. | |