Today’s Wall Street Journal has several paragraphs from a speech given by financial writer James Grant at the Federal Reserve Bank of New York.

Grant observes that central bankers everywhere are determined to prevent the general fall in prices (the feared phenomenon of deflation) that improvements in production would bring about. They think inflation is beneficial but deflation ruinous.

Grant says, “Note, please, that the suppression of interest rates and the conjuring of liquidity set in motion waves of speculative lending and borrowing. This artificially induced activity serves to life the prices of a favored class of assets — houses, for instance, or Mitt Romney’s portfolio of leveraged companies. And when the central bank-financed bubble bursts, credit contracts, leveraged businesses teeter, inventories are liquidated and prices weaken. In short, a process is set in motion resembling a real deflation, which then calls forth a new bout of monetary intervention. By trying to forestall an imagined crisis, the Fed comes perilously close to instigating the real thing.”

The Fed is part of the “progressive” mythology that government can and should manage the economy for the general benefit. Political interventions, however, make a few people well off at the expense of the mass of the population.