The Fed Has Failed: Money Printing Can’t Create Actual Jobs

Deception at the Fed

by Ron Paul

For the past three decades, the Federal Reserve has been given a dual mandate: keeping prices stable and maximizing employment. This policy relies not only on the fatal conceit of believing in the wisdom of supposed experts, but also on numerical chicanery.

Rather than understanding inflation in the classical sense as a monetary phenomenon– an increase in the money supply- it has been redefined as an increase in the Consumer Price Index (CPI). The CPI is calculated based on a weighted basket of goods which is constantly fluctuating, allowing for manipulation of the index to keep inflation expectations low. Employment figures are much the same, relying on survey data, seasonal adjustments, and birth/death models, while the major focus remains on the unemployment rate. Of course, the unemployment rate can fall as discouraged workers drop out of the labor market altogether, leading to the phenomenon of a falling unemployment rate with no job growth.

In terms of keeping stable prices, the Fed has failed miserably. According to the government’s own CPI calculators, it takes $2.65 today to purchase what cost one dollar in 1980. And since its creation in 1913, the Federal Reserve has presided over a 98% decline in the dollar’s purchasing power. The average American family sees the price of milk, eggs, and meat increasing, while packaged household goods decrease in size rather than price.

Loose fiscal policy has failed to create jobs also. Consider that we had a $700 billion TARP program, nearly $1 trillion in stimulus spending, a government takeover of General Motors, and hundreds of billions of dollars of guarantees to Fannie Mae, Freddie Mac, HUD, FDIC, etc. On top of those programs the Federal Reserve has provided over $4 trillion worth of assistance over the past few years through its credit facilities, purchases of mortgage-backed securities, and now its second round of quantitative easing. Yet even after all these trillions of dollars of spending and bailouts, total nonfarm payroll employment is still seven million jobs lower than it was before this crisis began.

In this same period of time, the total U.S. population has increased by nine million people. We would expect that roughly four million of these people should have been employed, so we are really dealing with eleven million fewer employed people than would otherwise be expected.

It should not be surprising that monetary policy is ineffective at creating actual jobs. It is the effects of monetary policy itself that cause the boom and bust of the business cycle that leads to swings in the unemployment rate. By lowering interest rates through its loose monetary policy, the Fed spurs investment in long-term projects that would not be profitable at market-determined interest rates. Everything seems to go well for awhile until businesses realize that they cannot sell their newly-built houses, their inventories of iron ore, or their new cars. Until these resources are redirected, often with great economic pain for all involved, true economic recovery cannot begin.

Over $4 trillion in bailout facilities and outright debt monetization, combined with interest rates near zero for over two years, have not and will not contribute to increased employment. What is needed is liquidation of debt and malinvested resources. Pumping money into the same sectors that have just crashed merely prolongs the crisis. Until we learn the lesson that jobs are produced through real savings and investment and not through the creation of new money, we are doomed to repeat this boom and bust cycle.

  • khold1983

    A voice of sanity :) Go Ron Paul!

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  • 777BMWfan1

    Face it guys he wont be our president, the media will either cover a neo-con or a socialist

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  • JPB

    I hate to say this, but even if the man won his party he would never be elected because the majority of people in this country haven’t got the intelligence to understand the good that this man could do for our country.

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  • TheEdTeach

    OK, just to be fair….money printing does create some jobs……at the mint itself….LOL

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  • http://www.youtube.com/profile?user=Mr420wholesalers Mr420wholesalers

    LET PUSH RON PAUL OR RAN PAUL TOO PUSH FOR THE USE OF THE PATROIT ACT ON THE FEDERAL RESEVER,,, IS THIS THE WEAPON RON PAUL NEEDED TO SAVE THE REPUBLIC ??? PLEASE SEND VIROL TOO FRIENDS,,, WE NOW CAN MAKE THEM FALL ON THIER OWN SWORD !!!
    GOD BLESS MR.BONES…

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  • Pepsifx357

    A Modern Day Thomas Jefferson.

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  • http://www.youtube.com/profile?user=vakmerohos vakmerohos

    A simple, clean, with NO ”donate” button, with 0 advertise blog for the fluoride/ aspartame/ fastfood-head zombies out there… Please share with your zombie friends this bolg: kip6.blogspot.com

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  • vakmerohos

    A simple, clean, with NO ’’donate’’ button, with 0 advertise blog for the fluoride/ aspartame/ fastfood-head zombies out there… Please share with your zombie friends this bolg: kip6.blogspot.com

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  • nicoSF5

    Why would any give this a thumbs down?!

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  • http://www.youtube.com/profile?user=msungs msungs

    I am a former Police Officer who fled the USSA. When I worked at the Mall of America (Bloomington, MN) we received an intelligence bulletin from DHS (Department of Homeland Security). It said that anyone with a Ron Paul bumper sticker, Don’t Tread on Me Flag, Anti-Federal Reserve/Tax protesters, Libertarians, Anti-Government Bumper Stickers, people who carry or mention the US Constitution, and even returning veterans were all possible domestic terrorists + should be scrutinized. I left.

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  • msungs

    I am a former Police Officer who fled the USSA. When I worked at the Mall of America (Bloomington, MN) we received an intelligence bulletin from DHS (Department of Homeland Security). It said that anyone with a Ron Paul bumper sticker, Don’t Tread on Me Flag, Anti-Federal Reserve/Tax protesters, Libertarians, Anti-Government Bumper Stickers, people who carry or mention the US Constitution, and even returning veterans were all possible domestic terrorists + should be scrutinized. I left.

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  • http://www.youtube.com/profile?user=msungs msungs

    If Ron Paul ever became President or got too close the Central Bank (the Federal Reserve as Federal as Federal Express) would have him assassinated (maybe even if he’s not close) like the Central Bank did Lincoln in when he tried to print the debt-free Greenback or when Kennedy (killed by the Fed) tried to continue to print the debt free United States Note. The Banksters get their way + have their puppet/marionette “Owe”bama. End the Fed. Ron Paul is a modern day founding Father.

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  • msungs

    If Ron Paul ever became President or got too close the Central Bank (the Federal Reserve as Federal as Federal Express) would have him assassinated (maybe even if he’s not close) like the Central Bank did Lincoln in when he tried to print the debt-free Greenback or when Kennedy (killed by the Fed) tried to continue to print the debt free United States Note. The Banksters get their way + have their puppet/marionette “Owe”bama. End the Fed. Ron Paul is a modern day founding Father.

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  • http://www.youtube.com/profile?user=Clarkkent Clark kent

    dam right end the fed, no more greedy private banks printing our money, lets get back to the greenback money system…

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  • http://www.youtube.com/profile?user=SumerianInspired SumerianInspired

    dam right end the fed, no more greedy private banks printing our money, lets get back to the greenback money system…

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  • http://www.youtube.com/profile?user=JD JD

    also, “do you hear us ron?” he needs to get in the race and get the word out and give supporters the time to donate money to his campaign. i know there is a possibility of “burning out ” early in the race and nobody seems to want to throw in the first bid. but i believe he is more than a candidate he stands for the message of liberty and i think that message is timeless and will never become out dated.
    Ron Paul/Gary Johnson 2012!!!
    Audit the fed…then end it!!!

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  • http://www.youtube.com/profile?user=antichrist1909589 antichrist1909589

    also, “do you hear us ron?” he needs to get in the race and get the word out and give supporters the time to donate money to his campaign. i know there is a possibility of “burning out ” early in the race and nobody seems to want to throw in the first bid. but i believe he is more than a candidate he stands for the message of liberty and i think that message is timeless and will never become out dated.
    Ron Paul/Gary Johnson 2012!!!
    Audit the fed…then end it!!!

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  • merlinspower

    This Great Man should be leading our country.

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  • http://www.youtube.com/profile?user=solkacorot solkacorot

    Ron Paul will be the next President in 2012

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  • campaign4liberty

    Run Ron Run
    Run Ron Run
    Dr.Ron Paul ONLY Hope for America!
    info at Liberty Poet & Daily Paul
    websites

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