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The Fed Enabling Biden and Congress’ Destructive Agenda
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According to the Congressional Budget Office (CBO), 2021 will be the second year in a row in which the federal debt exceeds Gross Domestic Product (GDP). CBO also projected that this year’s federal deficit will be 2.3 trillion dollars, which is 900 billion dollars less than last year. However, CBO’s projections do not include the 1.9 trillion dollars “stimulus” bill Congress is likely to pass.

The CBO’s report was largely ignored by Congress and the media. One reason the report did not get the attention it deserves is Federal Reserve Chairman Jerome Powell’s continued commitment to making sure Fed policies enable Congress to spend as much as Congress deems necessary to address the economic fallout from the coronavirus panic.

As financial analyst Peter Schiff points out, the Fed’s commitment to ensuring the government can run up massive debt means the Fed will not allow interest rates to increase to anywhere near what they would be in a free market. This is because increasing interest rates would cause the federal government’s debt payments to rise to unsustainable levels. Yet, the Fed cannot admit it is going to keep rates near, or even below, zero indefinitely without unsettling the markets. So, the Fed continues to promise interest rate hikes in the future and the markets pretend to believe the Fed. When (or if) the lockdowns end, the Fed will find a new crisis justifying “temporarily” keeping interest rates low.

The Federal Reserve has not just endorsed massive federal spending, Fed Chairman Powell has also endorsed masks, vaccines, and social distancing to defeat the coronavirus and restore the economy. It is disappointing, but not surprising, to see the Fed go full Fauci.

The overreaction to coronavirus is a cause of the explosion in federal spending and debt we have witnessed over the last year. However, federal spending already greatly increased from January 2017 until the lockdowns. This spending growth occurred under a Republican president, a Republican Senate, and, from 2017 to 2019, a Republican House. One bright spot in Democratic control of the presidency and both houses of Congress is more Republicans will fight excessive spending and claim to be “deficit hawks.”

Republican hypocrisy in claiming to care about spending and debt only when a Democrat sits in the Oval Office is one reason why Democrats can so easily disregard debt. Another reason is the left’s embrace of Modern Monetary Theory. Modern Monetary Theory is the latest version of the fairy tale that politicians need not worry about debt and deficits as long as the central bank can monetize the federal debt.

Unless the government changes course, America will experience a crisis greater than the Great Depression. The crisis will include a final rejection of the dollar’s world reserve currency status. There will also be much increased price inflation. At that point Congress will have no choice but to limit spending, although it will try to hide cuts in popular entitlement programs by “adjusting” government measures of inflation. Congress could then blame the Fed for the reduction in value of government benefits.

Those who know the truth have two responsibilities. First, ensure they and their families are protected when the crash comes. Second, redouble efforts to spread the ideas of liberty and grow the liberty movement so politicians are pressured to cut spending and debt and to end the Fed.

(Republished from The Ron Paul Institute by permission of author or representative)
 
• Category: Economics • Tags: Federal Reserve, Government Spending 
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  1. Some nefarious players want to re-create the S&L scandal. They have to drum up public support for S&Ls in order to do it though, referred to this time as public banking. I guess that they have realized that the stock market is basically dead, and now want to loan their money to people without midlemen.  They just keep repackaging the same old shit.

    Andrea Iravani

    • Replies: @sally
  2. onebornfree says: • Website

    “…the Fed’s commitment to ensuring the government can run up massive debt means the Fed will not allow interest rates to increase to anywhere near what they would be in a free market. This is because increasing interest rates would cause the federal government’s debt payments to rise to unsustainable levels. ”

    The Fed has _always_ inflated!

    It,[i.e. gradual money supply inflation], has been a part of its publicly stated agenda for many years. Heck, back in the 1980’s I subscribed to the monthly Federal Reserve Bulletin, and the deliberate monetary inflation policy was clearly stated inside on the first page!

    Having said that, as far as I can tell, the enormous increases in the money supply since around mid-2008 have been “off the charts” compared to anything that preceded historically, to say the least!

    See my own : “Graphs- Federal Reserve Money Supply [MB, M1, M2, MZM] “:
    http://onebornfreesfinancialsafetyreports.blogspot.com/2019/11/graphs-federal-reserve-money-supply.html

    See also: “Mr. Ben Bernanke: The Great[est] Inflator ?”:
    http://onebornfreesfinancialsafetyreports.blogspot.com/2013/07/mr-ben-bernanke-greatest-inflator.html

    Regards, onebornfree

    • Replies: @beavertales
  3. @onebornfree

    “gradual money supply inflation has been a part of the publicly stated agenda of the Fed for many years.”

    Hand in hand with open borders. Mass immigration is a way to cool the inflationary effects of a flood of money, and to ensure it gets disbursed globally through remittances.

    Any populist politician who threatens mass immigration is going to come under attack from the banksters, because he is threatening the most important pillar of the money supply inflation scheme.

    • Replies: @onebornfree
  4. onebornfree says: • Website
    @beavertales

    “The present unsatisfactory state of monetary affairs is an outcome of the social ideology to which our contemporaries are committed and of the economic policies which this ideology begets. People lament over inflation, but they enthusiastically support policies that could not go on without inflation. While they grumble about the inevitable consequences of inflation, they stubbornly oppose any attempt to stop or to restrict deficit spending.” Ludwig Von Mises

    Regards, onebornfree

    • Replies: @Jokem
    , @sally
  5. SafeNow says:

    As I have posted before, the U.S. ranks around 25th to 30th internationally, in most everything. (The most recent examples being Covid-variant tracing, and the Democracy Index.) This is us. The money-printing’s purpose is to implicitly deny, obfuscate, and partially offset that reality. I can’t think of a politician or journalist who tells the truth about “this is us.” Bob Dole learned what happens if you, in James Cagney‘s words, look ‘em in the eye and tell the truth. I remember when he was running for president, Mr. Dole said that, in some ways, America used to be a better place. And that was the end of his presidential run.

  6. Jokem says:
    @onebornfree

    This is due to the politicians ‘divide and conquer’ strategy. Anyone who complains too loud, get their slice of the inflation pie cut off.

  7. sally says:
    @No Friend Of The Devil

    But can you describe” the same old shit” problem in the form of a generalized theory? Can that theory stand all challenges? When no presentation of any fact can unseat the the premise (over come the Null Hypothesis) in the theory, the theory can be used by the masses to protect itself from wrongful results. Such a theory would allow the masses to better understand things. You bright people always assume the masses are stupid, but i think they are collectively very bright<= and so to does the MSM.. Its just that the brightness is less concentrated in the singular persons of the masses, while the brightness is concentrated in those who are luckily enough to be a little smarter. The collective wisdom of the human society is far greater than the brilliances of a few who Oligarchs who control the nation state societies that coral and control humanity .

    A working hypothesis is necessary to coordinate the actions of those willing and able to do something about the "same old shit" problem you address. Luckily, its you suggest it is nothing new, so it should be relatively easy to make the point by example, and in terms that the average man can clearly understand. Your Brilliance is accepted at face, but for those who must share their individual bright spots with many others to equal you Brilliance you are charged by necessity of the time and urgency of the survival of our democracy is a human right, to make clear to the masses what it is you are capable to understand that they individually may need help to understand. Unless the masses understand there will be no resistance or solution to the "same of Shit [SOS] Problem

    What do you mean.?

  8. sally says:
    @onebornfree

    The masses do not understand. the difference between how price and wage deflation increases their buying power as opposed to the impact of inflation. How can the harms and benefits of deflation, and inflationt be put in a form that the masses can learn and understand from?

    • Replies: @onebornfree
  9. onebornfree says: • Website
    @sally

    A good question, one I cannot answer. I know through personal experience that it’s hard enough to get the average person to use/practise critical thinking, let alone consider the effects on their lives of systemic , deliberate inflation. 😒

    Regards , onebornfree

  10. As usual, my man Ron Paul is the only one who seems to know what we’re in for, financially-speaking (scroll down). I have one thing to add to this:

    This is because increasing interest rates would cause the federal government’s debt payments to rise to unsustainable levels.

    That’s true, but it’s only 1 of 2 reasons. The 2nd reason is this: Most Americans have their wealth in the houses and 401-k’s or whatever other investments in “the market”. Were interest rates let to rise to a natural level (the actual going price for money), then money would get taken out of the risky stock market to be put back in savings accounts, CDs, and the like. In other words the market would go way down, because it wouldn’t be the only game in town for saving one’s life’s labor. People’s paper wealth in the market would go, whoops, down the toilet…

    Also, regarding Dr. Paul’s usual happy encouraging ending for each column, I will say his “First…” sentence in this conclusion is good advice this time.

    Those who know the truth have two responsibilities. First, ensure they and their families are protected when the crash comes. Second, redouble efforts to spread the ideas of liberty and grow the liberty movement so politicians are pressured to cut spending and debt and to end the Fed.

    The 2nd one, well, how can I spread the ideas of liberty to woke neighbors, people in corporate for whom only lefty politics is acceptable at the workplace, and a Tower of Babel full of barely-English-speaking newcomers who wouldn’t know the US Constitution from the CCP Constitution or a SS application form?

    • Agree: SafeNow
    • Replies: @Jokem
  11. Jokem says:
    @Achmed E. Newman

    You underscore the failure of education here in the USA. We are going to be owned by Red China eventually.

    • Replies: @Achmed E. Newman
  12. @Jokem

    Since you mentioned that, Jokem, Peak Stupidity has a 5-part series on “Will America be looted by China?”.

    Part 1: Intro
    Part 2: Housing
    Part 3: Big Biz
    Part 4: The Fruited Plain
    Part 5: The Wilderness , and
    Part 6: Conclusion – The Golden Rule

    • Replies: @Achmed E. Newman
  13. anon[319] • Disclaimer says:

    The problems with the currency will not end until the public, domestic and international, rejects the dollar as a means of exchange. This will not be just the loss of reserve status though that will be a major blow. However, when the currency is repudiated it is unlikely the collapse of the government will be far behind.

    Certainly, politicians will not be gentlemanly about this. They will be fighting with any means necessary to hold on to their power.

    • Replies: @Jokem
  14. Jokem says:
    @anon

    I hope you are wrong, but suspect you are right.

  15. Wow, RP mentions MMT…. Pity he doesn’t quite understand it.
    MMT merely says, all things being equal a monetary sovereign can never go broke in its own currency. It does NOT give carte blanche to a government to print insanely.
    Printing (better, borrowing from an independent C. B that can refuse bad borrowing) may be good or bad. Good — money spent on productive investment. Money used to reduce the cost of business & cost of living. Bad — money printed to prop up or profit the FIRE sector at the expense of the 99%. Money printed to spend on ridiculously inflated Defense budgets (or worse, costly destabilising wars).
    So — since 2008 money creation has been mostly insane. It has not shown up, say as inflation figures, b/c inflation is mainly in asset prices & if it does leak, it’s covered up with inflation measures designed to under estimate real price inflation (as are the unemployment methods designed to under measure joblessness).
    This fantasy economy may continue for some time — given FED etc control over markets & rates.
    However, should the world wake up to the grossly inflated value of the USD, then this pinball machine economy could start ringing bells & giving repeated tilt signals…..

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