Where's Your Inflation Now Gold Boy?

One of the major complaints of those who oppose the Federal Reserve System, from the insane people behind the Zeitgeist Movies  to the even more insane members of the Paul family, has been their belief that the system causes high inflation. As Ron Paul has stated, quoted by the Zeitgeist Movement:

(Ron Paul) : “…what is the advice that you generally get, and that is inflate the currency. They don`t say debase the currency, they don`t say devalue the currency, they don`t say cheat the people with savings, they say lower the interest rates. The real deception is when we distort the value of money, when we create money out of thin air, we have no savings yet there`s so called capitol…so my question boils down to this-how in the world can we expect to solve the problems of inflation–that is the increase in the supply of money– with more inflation? “

The central banking practice that these people fear most is called Quantitative Easing  which is in the simplest terms increasing the money supply to banks. The concerns of people such as Ron Paul is that this will decrease the purchasing power of the dollar also known as inflation. The fact is that since the Federal Reserve began Quantitative Easing in November 2008 inflation has remained below 2% with the exception of 2011. In March of 2011 inflation began its climb above 3% this had little to do with central banking policies but was more likely due to the uncertainties caused by disasters in the Pacific Rim causing an increase in consumer prices.

Today the retail sales data for July was released and it showed that consumer spending has risen while prices have virtually stayed the same. Obviously the dollar has not seen it's purchasing power go decrease, in many areas it has increased. Why is this happening when the Federal Reserve is pumping money into the banking system at little or no interest? 

The answer is because this is the new economy. Prices cannot go up because we are at a time in which competition in the marketplace is at it's most efficient. Because of technological advances, the same ones that have eliminated many jobs,consumers now have full information about the price of a good. If you are at a store looking a product you may want to purchase you can pull out your smartphone do a quick search on google shopping and see what the product is going for at other locations. If the store you are at will not give it to you at the lower price you see online then just order it and have it show up the next day at your door. Is this a great country or what?

The reason to keep money cheap for banks is that if interest rates go up it will take away what little incentive there is for people to open new businesses and put people to work. The United States is already at or near full employment when looking at the jobs that need to be done for society to function not the supply of the work force. Any job creation is bonus at this point in a highly efficient economic system. The only reason for someone with the capital to create a job to actually create a job is if the risk to that persons capital is next to nothing. Which is why low interest rates are of the utmost importance if the goal is to keep people employed.