The presumption is that the Fed can promote economic growth through easy money and “exceptionally low” interest rates. More likely, the Fed is creating another asset bubble, this time in the bond markets. Treasury yields are at historic lows. The quest for higher yields is inflating a bubble in junk bonds, and investors are taking on more risk as they try to improve their performance.
The underlying problem, of course, is that in a world of pure government fiat monies and no monetary rule, the Fed and other central banks are subject to political pressure to “stimulate” the economy—a goal that is unattainable via money creation or interest-rate manipulation.
.. Getting rid of monopolistic central banks and moving toward a rules-based system of competitive “free banking” would offer an alternative that is consistent with a liberal economic order.
Liberalism—in the sense of limited government, individual freedom, and responsibility—requires sound money. Central banks always pose a threat to liberty. Today, in Zambia, the central bank has outlawed all transactions using foreign currencies (mostly U.S. dollars). Those who disobey face a prison term of up to 10 years. Monetary freedom cannot be ensured while central banks have a monopoly on money.