Civitas Board Chair Bob Luddy had this article published by the American Spectator. In it, he discusses how the Federal Reserve’s inflationary policies not only harm middle- and working-class families, but are the root cause of economic booms and bust cycles.
By manipulating rates, the Fed undermines all economic decisions and creates market distortions. This manipulation results in economic bubbles that are challenging to detect, until it’s too late. These bubbles can take many forms, such as over-priced common stocks, or high-priced commodities and hard assets, such as real estate.
The Fed’s policies severely undermine the middle class by making goods and services more expensive. For example, an average American family loses $700 in purchasing power if inflation is 2% annually.
Many workers do not receive a 2% raise yearly; as a result, their standard of living declines. Families recognize this problem when they buy groceries and household staples. And politicians who promise to help the middle class support this insidious wage-reduction policy. Inflation has very little visibility, but slowly, like negative compound interest, it reduces the buying power of every citizen.
Luddy also discusses how the Fed has an “abnormal concern” about deflation (used in this context as falling prices), a misplaced concern because falling prices enable people’s paychecks to go farther.