The Federal Reserve is Killing Capitalism

Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.

Capital represents the resources and labor used to produce goods and services.

Ism is a system.

Capitalism is an economic system based on the private ownership of the means of production and the incentives that drive for-profit operation.

Capitalism differs from other economic systems as it allows for the private ownership of production and the resulting profits. Most other economic systems rely to varying degrees on the government to decide how resources and labor are used and how profits get distributed.

The word “capitalism” defines the United States economy. Unfortunately, the U.S. is straying from capitalism. The United States government and Federal Reserve increasingly pick winners and losers by dictating how resources and labor are employed and how profits and losses get distributed.

This article focuses on one facet of government interference: The Fed has distorted the price of capital, which have driven negative economic and social consequences.