Why central banks are inherently crony and undermine the real economy (Video)Submitted by go213mph on Fri, 10/18/2013 - 19:27
Central banks exacerbate fluctuations in the economy, but we are told the exact opposite.
We are told that the Federal Reserve regulates interest rates so that economic shifts are lessened. Nearly everyone who has taken an economics class in the past 70 years has been told this.
But it’s not true. Central banks create instability because they tend to keep interest rates (the price of money, the most important price of all) artificially low for too long. This creates malinvestment, which eventually leads to corrections which are much harsher than if interest rates had just fluctuated with the market. This is basically what happened in 2008.