The Fed And The Corrosive Effect Of Inflation

clipped from blog.mises.org The Fed destroys time preferences because it turns people into consumption-oriented, gotta-have-it-now debt addicts. The Fed has wrecked the housing market and turned homes into leveraged bets. The net effect of the recent surge in household debt is therefore to throw entire populations into financial dependency. The moral implications are clear. Towering debts are incompatible with financial self-reliance and thus they tend to weaken self-reliance also in all other spheres. The debt-ridden individual eventually adopts the habit of turning to others for help, rather than maturing into an economic and moral anchor of his family, and of his wider community. Wishful thinking and submissiveness replace soberness and independent judgement. And what about the many cases in which families can no longer shoulder the debt load? Then the result is either despair or, on the contrary, scorn for all standards of financial sanity.