In the United States, Federal Reserve Monetary policy is the most cited reason for the huge distortion in asset prices. If ordinary Americans had any idea of how much the asset enhancement initiative has and is costing them, they would have reined in government a long time ago. There is not enough space in one article to explain all of the thinking errors that have contributed to the poverty of Americans. I will go over a few.
The biggest error of course, is the notion that economic stimulus by government has any chance of benefiting everyone in the country. A close second is the idea that experts are competent and know the best thing to do. Close to that is the expectation that the public is being dealt with honestly.
The notion that deflation is bad and needs to be avoided is lethal with respect to the real incomes of citizens. Deflation is an important part of a free market system and occurs from time to time. At any given time one segment of the economy has an advantage over all others. This is always temporary. When the productivity of labor increases, prices come down. The real income of labor increases because earnings buy more. GDP can suffer a temporary setback but always recovers.
What Federal Reserve quantitative easing has done is elevate profit margins of corporations artificially. Inflation is now being tauted as a good thing. It is not. If you want to know why your basic living expenses have increased so much, this is the reason. Quantitative easing is a political initiative and has never had a chance of improving the over all economy. There is not even a theory that says it will or could. It is only a way of bolstering the economic situation of the worlds most politically powerful citizens.
I have been writing constantly, for many months, that government intervention is destroying the economy and the final result will be a terrible crash. The horrible situation the economy is entering into would not be possible without the near total stupidity of ordinary American who for years have been duped into promoting their own poverty.
It may be to late to avoid an economic disaster but individuals can still act in their on behalves and minimize further damage to themselves. As I have said many times, nature provides basically one incentive, self interest. The incentive to serve exists only in folk’s imaginations. Just knowing that people in government are there to take for themselves and only represent folks who make it worth their while, puts one at a great advantage in trying to survive the coming stress.