The Fed Is Nothing But An ATM Machine
By
Monty Pelerin, posted December 3rd, 2009 http://www.economicnoise.com/2009/12/03/the-fed-is-nothing-but-an-atm-machine/
The
Fed has reached the point where there are two choices — Allow the
government to shut down or allow itself to be the Treasury’s ATM
machine.
Inflation is, as Milton Friedman was fond of saying, “always and everywhere a monetary phenomenon.” It is insidious. 
It
becomes a part of everyday life, sometimes overlooked. It is cumulative
and devastating. The US dollar has lost 96% of its purchasing power
since the formation of the Federal Reserve in 1913. Most of that loss
occurred from the late 1970s. The US abandoned Gold as backing for its
currency in 1971, which left the entire world on fiat currency,
unbacked by anything but government promises. 
The American worker was clobbered during the past 30 plus years,
whether he realized it or not. Today’s real weekly wage is below that
of 1966. It has been so since 1977. During the late 1970s and early
1980s inflation was more than insidious, it was blatant. Mortgage
rates, the prime rate and inflation rates rose well up into double
digits. Inflation then was not some mild background music to life. It
was a cacophony. As Reagan described it: “Inflation is as violent as a
mugger, as frightening as an armed robber and as deadly as a hit man.”
We are likely now on the eve of an inflation that will make the
Carter-Reagan era appear mild. The political class and their actions
assure that.
This chart shows rather dramatically what has happened to the
Monetary Base. In late 2008, it more than doubled in three months. As
of last month, the monetary base had grown to over $2.2 Trillion, a
record and almost a tripling in one year! This rate of growth is
unprecedented in this country and has usually preceded hyperinflation
in other countries. Were there not mitigating circumstances, one might
expect the total money supply and the general price level to triple
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