The Unstoppable Path to Ever-Increasing Currency Debasement, by Nick Giambruno

You reach the point where you can’t get off the merry-go-round, no matter how hard you try. From Nick Giambruno at internationalman.com:

The Federal Reserve has returned to monetary easing in an environment of elevated inflation.

It raises an important question…

If one of the steepest rate hike cycles in history couldn’t defeat inflation…

And the Fed can’t raise rates much further without bankrupting the US government because of the soaring interest expense…

How will the Fed EVER escape the trap of ever-increasing currency debasement?

I don’t think it will be possible.

It’s like being on a runaway train with no brakes.

When you put together the pieces to see the Big Picture, it’s clear that ever-increasing currency debasement is the inescapable outcome of the US government’s debt spiral.

Step #1: It’s politically impossible to even slow the federal spending growth rate, let alone cut it.

Step #2: Issuing ever-increasing amounts of debt is the only way to finance continuously expanding budget deficits.

Step #3: An ever-growing interest expense on the ever-growing federal debt compounds the problem because it adds to the deficit, which needs to be financed with even more debt, which causes more interest expense. In other words, the debt spiral is here.

Step #4: The skyrocketing interest expense threatens the solvency of the US government and forces the Fed to cut interest rates, buy Treasuries, and implement other monetary easing measures to try to control it.

Step #5: The money supply expands due to the Fed’s interest cost control measures.

Step #6: As the money supply expands prices rise, which compounds the problem as it increases government spending (go back to step #1).

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