A great article from Mr. Will, which makes a nice companion piece to our post from a week or two ago (“When the Fed has to Print Money, …Just to Print Money“).
There’s no happy ending to all this, merely a selection of worse ones.
RICHMOND— A display case in the lobby of the Federal Reserve Bank here might express humility. The case holds a 99.9 percent pure gold bar weighing 401.75 troy ounces. Minted in 1952, when the price of gold was $35 an ounce, the bar was worth about $14,000. In 1978, when this bank acquired the bar, the average price of gold was $193.40 an ounce and the bar was worth about $78,000. Today, with gold selling for around $1,600 an ounce, it is worth about $642,800. If the Federal Reserve’s primary mission is to preserve the currency as a store of value, displaying the gold bar is an almost droll declaration: “Mission unaccomplished.”
Today the Fed’s second mission is to maximize employment, and Chairman Ben Bernanke construes the dual mandate as a single, capacious assignment — “promoting a healthy economy.” But the Fed’s hubris ignores the fact that it anticipated neither the…
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