Recently, September 18, 2015 the Dow Jones dropped 290 points (1.74%).   The volatility of the stock market has been very high, having over one percent moves several times a week.  I believe this economy has been very injured by our monetary policy.  The fiscal and long term federal debt is a big player in warping the monetary policy that hampers the economy.  This Quantitative Easing (QE) and long term low interest rates hides the true value of the dollar until it is so distorted that it has to be revealed and often crashes the stock market and the economy as everyone tries to adjust. 
The first major mistake is that we have the federal government through the Federal Reserve setting prices of interest, which is price control.  Price controls always ends with higher prices, lower quality and less product.  The false ways these factors are measured belie this last statement, however true measures and recognition of where the excess cost emerge prove the damage.  The second major mistake is that the FED set the price of interest so low (roughly 0% for 7 years) that it disincentives people saving.  Lack of saving causes major problems for the person not saving for retirement and also depriving the economy of much need capital.  Capitalism needs capital.  
People’s inflation adjusted salaries are often significantly down and they become underwater in their home.  Values of long term contracts such loans, mortgages and business contracts rely on a stable value of currency.  QE and price controls on interest rates unconstitutionally change the value of the dollar and distorts very important business planning.        

Picture
The small closed economy where it is easier to see causes and effects.
Let's look at our small closed island of 100 people and test what happens if we inject massive amounts of extra money in the system.  If there is a $100x economy a week meaning the average person brings $1x of goods and services to market, some a little higher and some lower.  Now let's say the bank starts to issue $1x extra dollar into the system every month for years. These new dollars are not backed up like the original. These were introduced as loans which pushed down interest rates.
This does several bad things. First with lower interest rates, the people are not as willing to save some money for their future. Lower interest rates incentivize long term investment not advisable at higher rates, which fails when reality happens. Without gradual inflation to match the currency inflation, the people become vulnerable to massive sudden moves in the value of the dollar.  Now merge this small closed economy with America to see the symptoms, likely results and solutions. 
So many people are holding savings in a currency that has no underlying worth. QE and low interest rates are increasing this worthless base.  When an undeniable downturn happens, like it always does about once a decade, many people will try to turn their currency into real goods and services, creating a mass realization that the value is not there.  Prices have the real possibility of a massive popping of the money bubble that was pumped up by the FED with the destructive hot air of QE and low interest rates.
This Pop could suddenly shoot prices up dramatically greatly changing negatively the value of your paycheck. This would wreck long term contracts and sink banks that are on the losing side of being paid back with currency half the value of when the loans were started. Retirement plans, including Social Security would also be on the losing side. Government statistics will under measure cost of living inflation numbers and retirees will be worse off. 

Government that messed up our banking system, will 'FIX' the problem with far greater control.  They did not learn the correct lessons from 2008 and just increased the 'Fix' that just took this economy to a more treacherous cliff with thinner trails along the edge. All the rocks we are stepping on seem be unstable and our way back has already collapsed. The FED needs to constantly use every tool in the climbing bag to hang on and the only path is up to more perilous places.  
Capitalism and free enterprise is strong enough to rescue this economy if congress will allow the American people to grasp capitalism's hand for a rescue.  In 2016, America has a choice of Bernie Sanders heavy government control that leads to more dangerous cliffs and massive problems or a Ted Cruz free enterprise approach that puts the U.S. on firm ground of solid economic growth, personal liberty and self-government.
The solution
 


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    Bill Haley

    Bill Haley started Haley2024 in the spring of 2013 in an effort to do his part in restoring freedom to America

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