How the Federal Reserve Centrally Plans United States Economic Growth

The idea that the United States has a free market economy is ludicrous. In a free market economy the prices of goods and services are set by the marketplace.

In the United States, the prices for interest rates are set by the Federal Reserve. Through its control of interest rates the Federal Reserve centrally plans United States economic growth.

In a free market economy interest rates would be freely determined by the marketplace. Only the marketplace knows for certain where interest rates should be at any given time.

In the United States we have a government chartered institution called the Federal Reserve that artificially sets interest rates. By artificially setting interest rates the Federal Reserve centrally plans United States economic growth.

Like all central planners the world over and since time began, the Federal Reserve has continually done a horrible job setting interest rates. Through its bad central planning the Federal Reserve has caused continual recessions and the Great Depression and limited United States overall economic growth.

Whenever the Federal Reserve has interest rates set too high or too low from where the marketplace would set them, the government run institution has caused economic growth to be lower than it would be. If the marketplace set interest rates, United States economic growth would be much larger than it has been since the creation of the Federal Reserve.

To show this is true, imagine that a government institution existed called the Federal Oil and Gas Reserve. This institution artificially sets the prices of oil and gas that all Americans pay. Would that be a good thing for the economy and for United States economic growth?

Would the central planners of the Federal Oil and Gas Reserve be better at setting the prices of oil and gas than the free marketplace? Of course not. Only a devout communist, socialist or fascist would argue otherwise.

To allow a very small group of people to set the prices of oil and gas in the United States economy would be the height of stupidity. There is no way a small group of central planners could set the prices of oil and gas and do a better job than the marketplace. And by getting wrong the prices of oil and gas the central planners would cause great harm to the economy and slow economic growth.

Yet in the United States we have a very small group of people sitting in a government institution in Washington centrally planning where interest rates should be. Why is the Federal Reserve allowed to centrally plan interest rates and subsequently economic growth in the United States?

There is no way the small group of people setting interest rates at the Federal Reserve are doing a better job than the free marketplace would do. Those few people at the Federal Reserve setting interest rates are doing a tremendous amount of damage to the United States economy and have been since the Federal Reserve was created.

Many people do not really know how to characterize the Federal Reserve and the people who have worked there and are working there. It is really easy to characterize them. They are central planners and no different from any other central planners in human history.

So whenever you see someone associated with the Federal Reserve talking always remember what they really are. Central Planners.

© Joe Dorish

For more see:

What's Wrong with the Federal Reserve

How the Federal Reserve is Screwing Up the U.S. Economy Right Now

Explaining Exactly Why the Great Depression Happened

Why You Must Do Calculations Before Making Financial Transactions

How to Get One Week's Worth of Groceries for Free