The Fed’s “Sick Design”: How Post-2008 Policy Supercharged the Cantillon Effect

With the Fed cutting rates this month, free-market economists stand alone again in their condemnation of inflationary monetary policy. Despite recent years of high inflation, most economists still don’t appreciate the sinister and destructive effect inflation has on the economy, even in small amounts.

The following article was originally published by the Mises Institute. The opinions expressed do not necessarily reflect those of Peter Schiff or SchiffGold.

Perhaps it’s just for convenience that most macroeconomics textbooks still teach and discuss monetary and banking policy as if the 2008 and 2020 changes never happened. But when I recently supplemented a classroom discussion with the actual framework, I fell down a rabbit hole so disturbing that Bob Lee Swagger’s horrified line from Shooter, “What kind of sick mind would think of something like this?” (this is the TV version of the original), has been looping in my head ever since.

I knew these changes existed, but I had never fully grasped the perverse incentives they unleashed. Even assuming the best of intentions, the outcomes explain the devastation of Main Street and the staggering concentration of wealth and power on K and Wall Streets.