01/21/2015 - Will the Federal Reserve Create Inflation by Stopping Its Interest Payments on Bank Excess Reserves?
The Daily Bell essay points out how central banks would rather create inflation than live with a “gentle deflation” that free marketeer Murray Rothbard advocated .. after all, inflation helps governments reduce their debt burdens through financial repression .. right now banks are being paid 0.25% interest on their bank excess reserves held at the Federal Reserve, but if the Federal Reserve reduces this interest rate, it could push banks to begin lending or somehow putting this money into the real economy, ultimately generating inflationary forces – in addition to debasing currency by printing more of it, this is another way inflation can be generated .. “The banking class for no good reason has decided that inflation is preferable to deflation, probably because they (only they) have access to the printing presses and thus can cause monetary inflation. There is no reason to fear gentle deflation, but it has been made into a bogeyman. This gives bankers the justification to print. And print they must. In 2015, we’ll see a lot more of it, especially given all the alarmist warnings in the mainstream media about the danger of currency that increases in value. Conclusion: Only debasement will do.”
