The following is a guest post by SFL campus coordinator and Grande Prairie Regional College student, Chance Davies.
The monopolization of the monetary system by governments through central banking is wreaking havok on the West’s economic standing, and it’s hitting Millennials the hardest.
Central banks, like the Federal Reserve or the Bank of Canada, have no contractual obligation to maintain their issued currency’s value or to redeem issued currency in full. For this reason, a central bank can increase the money supply (a.k.a. quantitative easing), thereby devaluing it, lowering consumer purchasing power, and causing higher inflation. Since the founding of America’s Federal Reserve system in 1913, the relative real value of a $1 commodity that year has increased to $23.30 in 2013, and though wages have increased, they haven’t come to par with the inflation rate. No wonder the prices of our beloved Sriracha, post-secondary education, and healthcare costs have started doing serious damage to our personal budgets. The markets can only do so much to keep costs from increasing too much through innovation, and this artificial devaluation of our money supply is contributing heavily to the current inflation levels we are experiencing.
To add to the woes of Millennials, central banks can issue money to the government to spend (carelessly I may add), which compromises a strong balanced budget. Just like all loans, that money still has to be paid back to their creditors with interest, something our government neglects to do. This is only pushing us further into debt. As a member of a generation that already has an immense amount of personal (student loans anyone?), and public debt saddled on us, and no indication of this slowing down anytime soon, we run the risk of economically bankrupting our countries. Central planners’ attempts to artificially grow the economy are jeopardizing the success of our financial future.