by Dennis Miller
Miller on the Money
Anyone remember when our money was backed by gold? Top of the dollar bill said “Silver certificate”? Today our bills say, “Federal Reserve Note”; called fiat currency. Fiat currency is government IOU’s (political promises). The value of fiat money is based on supply, demand and faith in the issuing government.
Adam Smith said, “All money is a matter of belief.” When the world loses faith, the currency becomes worthless paper.
I’m concerned about Fed Chairman Jerome Powell’s recent announcement about targeting inflation:
“Our longer-run goal continues to be an inflation rate of 2 percent. …. However, if inflation runs below 2 percent following economic downturns but never moves above 2 percent even when the economy is strong, then, over time, inflation will average less than 2 percent. …. To prevent this outcome…our new statement indicates that we will seek to achieve inflation that averages 2 percent over time. Therefore, following periods when inflation has been running below 2 percent, appropriate monetary policy will likely aim to achieve inflation moderately above 2 percent for some time.