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Much ink has been spilled over the years bemoaning the fact that American’s don’t save,  more even than the ink poured over the inverse propensity of the Japanese. The recent “haircut” being imposed on depositors in Cyprus, however — and all the reassurances of how exceptional this move is and how unprecedented — only makes sharper the long-standing policy, now in full overdrive, of the US central bank of keeping interest rates too low for savers to get ahead of the inflation that erodes the value of their money.

In effect, the Federal Reserve has been funding growth since at least the 1980s by doing in darkness what Cyprus has so rashly decided to make explicit: that is taxing savings by reducing their real value. Cyprus had no choice — it does not control its own currency, and so induced inflation, concealed or otherwise, is plainly not an option. The Fed does have a choice, but poisoned as it is with long-falsified Keynesian ideas it persists in taking our money for the sake of growth that manifests itself increasingly in a  succession of asset bubbles.

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