Dr. Ron Paul interviewed Chris Rossini, regular contributor to LewRockwell.com and author of Set Money Free: What Every American Needs To Know About The Federal Reserve. Together, they debunked some common American myths, including the real source of inflation, US foreign policy against radical Islam, and the importance of real savings and capital in an economic system.
Going back and forth with Paul Krugman, I argue the case that his definition of inflation is different than mine. He says inflation is when the CPI goes up, which is a government statistic which they can alter at will… Austrian economics teaches that inflation really is the increase in the supply of money and credit, especially when it is artificial and comes from the Federal Reserve.”
(Video length 00:18:44)
Highlights from the video:
Rossini: Let’s start with the great enabler of much of our country’s problems – the Federal Reserve. If there’s one thing that our viewers should always keep in mind, it’s that when inflation occurs, you always want to point to the source, which is the central bank, the Federal Reserve. That’s despite what happens with the media. They try to blame everybody else and everything else under the sun, but inflation is always a monetary phenomenon and blame should always go to the Federal Reserve. What happens when prices go up, is the government, in its desire to help, often comes in to institute price controls. The combination of central bank inflation and price controls are like a one-two punch on the public. The government takes a bad situation and makes it worse. Please, Dr. Paul, talk about price controls and how if inflation hits in our country, people should look in that direction.
Paul: One of the reasons there is a lot of confusion about where inflation comes from and what we should do about it, is the fact that not everybody agrees with the same definitions. Going back and forth with Paul Krugman, I argue the case that his definition of inflation is different than mine. He says inflation is when the CPI goes up, which is a government statistic which they can alter at will. If it goes up too fast, they just change it. Austrian economics teaches that inflation really is the increase in the supply of money and credit, especially when it is artificial and comes from the Federal Reserve. You can have an increase in the supply of money in a natural way when it’s a commodity like gold. That, of course, doesn’t cause the problems of malinvestment and prices going up. Price inflation is what people think about and are concerned about. The unfairness of it all is that if wages went up equally and prices went up equally and the cost of living went up equally for everybody, it’d be no big deal. Increase the money supply by 10% and everything goes up by 10%. But that never happens. Some people get hurt more than others. Some people get rich, some people get poor. It’s a vicious cycle…
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