My letter to the editor, The Record (Hackensack, NJ), December 14
America’s ‘legal’ counterfeiters
“Feds battling sharp rise in fake money” (Page A-1, Dec. 11) fails to mention the biggest counterfeiter of them all: the Federal Reserve. The Fed is America’s “legal” counterfeiter, which can create an unlimited amount of new money at the stroke of a keyboard. In other words, the Fed has been given the legal authority by Congress to create money “out of thin air” to stimulate” the economy by keeping interest rates down, harming savers and middle- and low-income families.
While private counterfeiters are considered criminals because they are not authorized to create newly printed Federal Reserve notes, the economic impact of counterfeiting — legally and illegally — is the same; it redistributes income from the general public to the initial recipients of new money. In short, the legalized counterfeiting causes prices to rise — inflation — benefiting the military-industrial complex and other politically connected segments of our society who clamor for cheap money.
Moreover, the Fed’s legalized counterfeiting is more harmful to the economy than private counterfeiters, because the new money it creates first enters the banking system and helps create financial bubbles. Both the dot-com bubble and the most recent housing bubble were caused by the Fed’s “easy money” policies — legal counterfeiting.
If the authorities charged with hunting down counterfeiters want to end “counterfeiting,” they should order the Federal Reserve to refrain from another $600 billion of “quantitative easing,” a euphemism for massive money printing, that is, legalized counterfeiting.
Fort Lee, Dec. 12
The writer is professor of finance at Ramapo College of New Jersey.