Tuesday, August 19, 2008

Prices up, economy down

If the Fed raises interest rates, the economy will get worse. There's an election ahead, so raising rates is not a choice. If the Fed doesn't raise interest rates, it will sit and watch prices rise.

What are we faced with now? According to a Reuters report,
Wholesale prices shot up in July at the fastest year-on-year rate since 1981, while home builders cut back on construction as they worked through a glut of unsold homes, government data showed on Tuesday.

The reports offered little solace to the U.S. Federal Reserve, which is hoping that a slowing economy will cool inflation so that the central bank can hold off on raising interest rates.

Stefan Molyneux has written:
Many times throughout human history, certain societies have come to the valid conclusion that an institution can no longer be reformed, but must instead be abolished. The most notable example is slavery, but we can think of others as well . . .
Yes, we can.

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