The Fed Enabling Biden and Congress’ Destructive Agenda, by Ron Paul

Once upon a time central bankers warned of the dangers of debt. Now they enthusiastically endorse it. From Ron Paul at ronpaulinstitute.org:

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.

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