Free Money for Banks Does NOT Stimulate the Economy!

Free Money for Banks Does NOT Stimulate the Economy!

Dr. Ron Paul

Activist Post

January 31, 2012

The Federal Reserve’s interest rate price-setting board, the FOMC, met last week. They will continue to set the federal funds rate at well below 1%, and plan to keep it low until the end of 2014. That’s a year and half longer than they planned when they met just last month. Chairman Bernanke says they are keeping interest rates so low for so long because the economic outlook warrants it.

The fallacies in their reasoning would be amusing if they weren’t so dangerous. The Fed wants to keep the price of money at essentially zero – in other words “free” – to boost the economy. But the boost they are attempting won’t get here for another three years. That’s not a recovery. And we’ve already tried this tactic. That’s how we got into this mess in the first place: with interest rates artificially low for a very long time.

Free money doesn’t stimulate growth, as Japan’s two lost decades clearly show. Artificially low interest rates only serve to punish saving, distort market signals, and cause further malinvestment. They also do nothing to address the only real solution to our economic woes: liquidation of the bad debt that hangs around the neck of the world’s economy, preventing recovery. Artificially low interest rates merely ensure that we remain a debt-financed consumer economy guaranteed to end up with a weaker economy and higher prices.

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11 Responses to Free Money for Banks Does NOT Stimulate the Economy!

  1. canobs says:

    __Econo crises could be erased easily, but this will never happen,___ First, the fed should be public like mentioned in the constitution. The three president trying to make it public were assassinated by the banking lobbeys and the secret services (now NED-CIA). ___ Second, The social-credit economic system of the economist Clifford Hugh Douglas should have been installed (right after the successful industrial era of John Meynard Keynes, whose theories could not be applied in today,s economic era). ___Third, the Tobin tax should be instated on all market transactions to limit the wild casino-type speculations. ___ Fourth, limits on salaries, bonuses commissions, and revenues of banksters, traders, brokers, lobbeyists, administrators of multinational companies, surpluses made in a trust fund to eradicate debts, deficits, and ___Fifth, prohibit the use of fiscal heavens, hedge funds (registered in non-tax countries) to end the actual gigantic fraud of the free market ponzi scheme casino economy, run by oligarchs in a fake democracy.

    • This is no solution. The theories of Keynes are ludicrous and can not work. They violate every law of economics. Limit salaries? This violates laws of economics and stinks of redistribution of wealth–we know that system is a miserable failure.

      • canobs says:

        Of course, Keynes theories could not work today in such a corrupted system

      • Keynes theories will never work under any circumstances in any system. They can have an immediate stimulative effect, but it is credit card growth and always devalues the currency creating an inevitable bubble that will burst some time in the future.
        That is the problem with Keynesian economics.We are currently in the last end cycle of Keynesian theory….in the last bubble so to speak.

  2. canobs says:

    For these reasons, the Sarkar law on social cycles always applied (historically) and always will, BEING,___Alternatively in power, ___ The Intellectuals (religious or other) ___The Military ___ The Laborers/workers (socialism/communism) ___ The Accumulators (like today,s oligarchy, opression by the private bankers) — see the documentary video — zeitgeist addendum —

  3. canobs says:

    There is two kinds of democracy, the Representative (actual fake form) and the Participative form, with permanent citizens comittees, meeting at least monthly (regional and/or municipal) participating in all important government decisions, including military, by vote or referendum, we are far from there folks._______There can be no communism without totalisarism or socialism without solidarity, anything social is called charity in glorious USA. Is it normal, no way.

  4. gideon says:

    Article IV Section 4 Mr. Canobs

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