How true Keynes' words have been. Since its inception in 1913 the Federal Reserve Bank of the United States has perpetrated policies that have devalued the U.S. dollar by over 90 percent. It has done this by increasing the money supply arbitrarily through fractional-reserve banking, interest rate adjustments and yes as the context of Keynes' statement indicates through the printing of money out of thin air. For the most part, almost all Americans have been oblivious to this grand larceny of epic proportions. Many realize that they cannot buy as much as days gone by, but they don't know exactly why. Many realize that they will have to save/invest a lot more for a better retirement than their grandparents, but again many do not know why. I remember a history teacher of mine bemoaning the fact that unlike his father of a generation earlier he could not afford to buy a new automobile each year. He made more money than his father did, but that just didn't convert into a new car per annum. The irony was that my history teacher, like many, loved Franklin Roosevelt, who was of course the very scoundrel responsible for taking us off the Gold Standard and allowing the Fed through our elected officials to print money at will and debase our currency.

What is truly amazing is that today given the consequences of fiat money and all the trillions of dollars the Fed has already printed for “economic recovery” there is still a large clamoring for more artificial dollar production to “thaw” credit markets. Most pundits, journalists, and economists are badgering the incoming Obama Administration and Congress to do more. Well, their wish is about to come true.

Congress is considering an $825 billion “economic recovery plan”. The plan would do everything from making homes more energy efficient to, if you can believe it, infusing cash into money-losing companies to help them stay afloat. It's the old, the government can solve all of our problems with no costs mentality. Of course, for those of us that understand why we have to save more for retirement and why most of us no longer can buy a new car every year it is more of the same the Federal Reserve counterfeiting our currency and thereby devaluing it based on false economic theory that was discredited long ago.

The facts speak for themselves. Uncle Sam has already injected over $2 trillion to thaw credit markets and stimulate the economy. What do we have to show for it a surging unemployment rate, the lowest consumer confidence in a long time, and still no pick up in banks loaning money again. As of the week ending December 17, 2008, the cash reserves of banks in the U.S. increased to $774.4 billion from $604.7 billion in November and an incredible $2.39 billion in December 2007. In December the yearly rate of growth of commercial bank loans fell to 3.55 from 4.8% in November and a hearty 10.2% in December 2007. Remember how we were told by the Paulson/Bernanke/Bush Crime Syndicate that if Congress didn't appropriate $700 billion in October the world would come to an end? Their scare tactics were based on phony economics then and consideration of even more spending now is based on equally phony economic assumptions.

Make no mistake about it, even though the Fed has pumped trillions of dollars into the economy prices continue to fall. That's because consumers, banks, and other businesses have not bought into the government's phony recovery scheme and are saving their cash for harder economic times to come. Those times will come and be accompanied by the realization of most Americans that the dollar has been devalued enormously and they better spend theirs before it is too late. At that point, the resulting inflation and lack of goods to buy from all the spending will send us into an economic ice age. Unfortunately, even then, Keynes words will be prophetic. I am sure the Fed's printing press activities will not be blamed for our disaster. Like now, the blame will fall on capitalism.