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Thanks for nothing, Fed

August 21, 2007

Re "Fed gets message, lowers key rate," Aug. 18

If there ever was proof that the Federal Reserve doesn't know what it's doing, it's in its feeble attempt to stave off the bust that must eventually follow the boom that it caused.

Never does The Times mention that when the Fed injects liquidity, it simply creates the new money out of thin air. This is why it's called "money inflation," like blowing up a balloon. This leads to mistakes in investments and hiring because the Fed's newly created money is like a perfect counterfeit note; investors and savers cannot tell the real from the fake.

The Fed's actions will simply pump in more money that will never be withdrawn; thus, somewhere down the road, our money will again lose its value. How much depends on how much counterfeiting other central banks engage in. But that only affects the exchange rates. Eventually we will see price inflation as the currency becomes diluted. This is no secret, as it was written years ago by the long-ignored but brilliant economist Ludwig Von Mises.

Eric Taylor

Sunland

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