Airing date: 8/4/2008 Fed to Set Price of Money - Tuesday 8/5 August 5th, 2008 by Michael Nystrom Over the past few decades it has become fashionable to lament the fact that Americans no longer save. Tsk tsk, the pundits say, how lazy and stupid Americans have become. But this is not true. By not saving, Americans are actually acting rationally under our current crazy monetary system, which More.. benefits the powerful and politically connected few at the expense of the rest of us. Today’s official (government calculated) inflation rate is around 5%, meaning that the real figure is certainly higher. But the interest rate that a saver will earn at the local bank is only about 1%, because the Fed keeps interest rates artificially low for the benefit of its constituency. This means that hardworking savers (who are definitely not members of this constituency) are actually losing 4% of the value of their money due to inflation! Why on earth would anyone save if they are losing money? The answer is they wouldn’t, and they don’t. So don’t blame the American people for not saving, it is the twisted system that creates this twisted yet rational behavior as an outcome. Take some time to ponder this today as they meet to set the price of our money. Incredibly, one of our recent central bankers actually understood this 40 years ago: "In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold…The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves. " But that was before he turned to the dark side. His name? Alan Greenspan. The above quote is from his 1967 essay Gold and Economic Freedom, long before he ever became Fed Chairman. Less..