How Can the United States and the World Rid Itself of this Disease — Asset Price Inflation?

There is also a bigger aim. How can the US and the world rid itself of this disease — asset price inflation? It is not enough just to say “End the Fed.” First, a keen and widespread awareness must emerge that the Fed has indeed been responsible for spreading a deadly plague of market irrationality which has undermined economic prosperity and become a danger to economic and political freedoms.

A key step in creating awareness about this plague should be the exposure of deflation phobia as prevalent amongst leading monetary officials. Asset price inflation in modern times has originated always in a context where the Fed is fighting against an “incipient danger of deflation” — trying to stabilize prices or even push them up by 2% p.a. when the natural rhythm would have been downward for some time. Yet in today’s world of information technology, this phobia of deflation becomes harder and harder to comprehend.

In this latest period of monetary experimentation led by the Federal Reserve, the central bankers have sought to terrify their audiences about widespread price falls and so justify their quantitative easing policies and use of other non-conventional tools, including negative interest rates.

—Brendan Brown, introduction to A Global Monetary Plague: Asset Price Inflation and Federal Reserve Quantitative Easing (Houndmills, UK: Palgrave Macmillan, 2015), 3.