Fed’s New Mission Is to Devalue the Dollar by 33%

The Management Board of the U.S. central bank (Fed) has officially announced, after two days of debate, its new goal: to devalue the dollar by 33% over the next 20 years. The decline will be greater if the Fed’s own inflation target of 2% per year won’t be met, reports Business Insider.

A price increase of 2% a year won’t be felt in your pockets. Back in the day, during the gold standard (when the dollar was tied to the value of gold), such an increase was unusual. When the dollar was tied to gold, the years with modest inflation were followed by years of price declines. As a result, on along term, prices remained stable. And an American dollar was worth a dollar, 20 years later.

But an increase of 2% per year for 20 years, will lead to a price increase by 50% over the same period. In 2032 you will need $150 to buy what you can buy now with $100. The future Dollar will have only two thirds of the value of the dollar now.

“The Federal Open Market Committee (FOMC) judges that inflation at the rate of 2 percent (as measured by the annual change in the price index for personal consumption expenditures, or PCE) is most consistent over the longer run with the Federal Reserve’s mandate for price stability and maximum employment. Over time, a higher inflation rate would reduce the public’s ability to make accurate longer-term economic and financial decisions. On the other hand, a lower inflation rate would be associated with an elevated probability of falling into deflation, which means prices and perhaps wages, on average, are falling — a phenomenon associated with very weak economic conditions. Having at least a small level of inflation makes it less likely that the economy will experience harmful deflation if economic conditions weaken. The FOMC implements monetary policy to help maintain an inflation rate of 2 percent over the medium term.”

In other words, the gradual destruction of the dollar is the best solution that the Fed may take, comments Business Insider.

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