You thought socialism was dead, other than in miserable countries such as North Korea and Cuba? Think again. It’s alive and well at the Federal Reserve, and we and the world are paying a price for it.
Our central bank tries to manipulate our economy in ways befitting a Soviet commissar. Take interest rates. Fixing the price of money is a form of price control, pure and simple. Until Ben Bernanke our central bank was content to fix short-term interest rates, which he announced would be kept at virtually zero through 2014. But in the aftermath of the financial crisis Bernanke is, in effect, dictating the price of all money, regardless of duration.
By owning so many long-term government bonds, Bernanke has created an artificial shortage of these financial instruments. Like a good central planner, Bernanke is using his policies to subsidize the still rapidly growing, gargantuan debt of the U.S. government. He also holds a huge stash of mortgages so that mortgage rates can be kept low in order to revive the battered housing industry. Big companies also find credit abnormally easy to get.
Read more at Forbes.com.