Tag Archives: Federal Reserve

The Disease Or Cure? Take Your Pick! by Dennis Miller

Most of the economic problems the U.S. faces can be traced back to the Federal Reserve. From Dennis Miller at theburningplatform.com:

Since I began my cancer treatment in 2019, my outside travel has been curtailed. Doctors, restaurants, and an occasional trip to visit family have been about it.

The good news is now I have more energy and feel like getting out and doing fun stuff. I recently made a trip to our local Factory Outlet Mall. I used to enjoy window shopping and eating in the food court. I was shocked, and unhappy with what I found.

The mall used to be full of cool stores, bustling with traffic. The photo is disheartening. I’d guess 40% of the stores are vacant. Stores closing, people losing jobs, landlords hurting, mortgage and bonds defaults are happening for the wrong reasons. It’s upsetting, but I realize there is not a damn thing we can do about it. We are on our own….

The Disease

Former congressman Ron Paul believes the cause of our economic problems is central banking:

“It is amazing that more individuals do not question the idea that inflation, recessions, unemployment, and booms and busts are necessary features of a sound monetary system. Even many otherwise staunch defenders of free markets maintain a child-like faith in central banking. …. These conservatives do not understand that the problem is the existence of a central bank with the power to manipulate the currency.”

Irresponsible politicians, coupled with central banking, is a cauldron for the economic problems we face today.

Academics believe in Keynesian economics. Keynes believed government spending should help thwart a bad economy and get it turned around. He also felt during good times, government revenue should exceed expenses and the surplus should be used to pay down debt.

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Debt… And Why The Fed Is Trapped, by Lance Roberts

The Fed is walking a tightrope between hyperinflation and a Greater Depression. From Lance Roberts at The Epoch Times via zerohedge.com:

The massive debt levels provide the single most significant risk and challenge to the Federal Reserve. It is also why the Fed is desperate to return inflation to low levels, even if it means weaker economic growth. Such was a point previously made by Jerome Powell:

“We need to act now, forthrightly, strongly as we have been doing. It is very important that inflation expectations remain anchored. What we hope to achieve is a period of growth below trend.”

That last sentence is the most important.

There are some important financial implications to below-trend economic growth. As we discussed in “The Coming Reversion to the Mean of Economic Growth“:

“After the financial crisis [of 2008–09], the media buzzword became the ‘new normal’ for what the post-crisis economy would be like. It was a period of slower economic growth, weaker wages, and a decade of monetary interventions to keep the economy from slipping back into a recession.

“Post the ‘COVID crisis,’ we will begin to discuss the ‘new new normal’ of continued stagnant wage growth, a weaker economy, and an ever-widening wealth gap. Social unrest is a direct byproduct of this ‘new new normal,’ as injustices between the rich and poor become increasingly evident.

“If we are correct in assuming that PCE [Personal Consumption Expenditures price index] will revert to the mean as stimulus fades from the economy, then the ‘new new normal’ of economic growth will be a new lower trend that fails to create widespread prosperity.”

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Central Planners of the World, Unite! By MN Gordon

Central banking is Soviet style central planning, and it has worked about as well as Soviet central planning did. From MN Gordon at economicprism.com:

Federal Reserve Chair Jay Powell wants a swift decline in the rate of consumer price inflation.  He isn’t getting what he wants.

According to the Bureau of Labor Statistics, consumer price inflation, as measured by the consumer price index (CPI), increased at an “official” annualized rate of 8.3 percent in August.

This exceeded Wall Street’s consensus expectations of 8.1 percent.  What’s more, it crushed investor hopes a ‘Powell pivot’ would come sooner rather than later.  On Tuesday, the Dow Jones Industrial Average (DJIA) crashed 1,276 points on the news.

Powell, a central planner, wants consumer price inflation to be about 2 percent.  Instead, he’s got something that’s over 400 percent higher.  What’s going on?

If you want to understand what’s up with raging consumer price inflation and Fed monetary policy, you must understand this.  Right now, in the United States as in most of the world, we have a scam currency that’s controlled by central planners.  Specifically, we have what Karl Marx envisioned in Plank No. 5 of his Communist Manifesto:

“No. 5.  Centralization of credit in the hands of the state, by means of a national bank with state capital and an exclusive monopoly.”

The Federal Reserve System, created by the Federal Reserve Act of Congress in 1913, is indeed a privately owned ‘national bank.’  It also holds a monopoly on legal counterfeiting in the United States.

Without the Fed’s policies of mass credit creation, it would have been impossible for the U.S. government to run up a $30.8 trillion national debt.  Without the Fed’s printing press money, the U.S. government never could have run annual trillion-dollar budget deficits for a better part of the last decade and a half.  Without the Fed’s fake money there would not be over 100 million people dependent upon the U.S. government for their daily bread.

This is the miracle of centralized credit.

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It’s A Fact That Needs Repeating: The Federal Reserve Is A Suicide Bomber, by Brandon Smith

The Federal Reserve answers to globalist masters and doesn’t mind blowing up the U.S. financial system and economy. From Brandon Smith at alt-market.us:

By Brandon Smith

For many years now I have been examining the policies and behaviors of the Federal Reserve because they are in fact the most powerful institution in the US, with far more influence over the fate of America than any single president or branch of government. They have the power to end the economic life of our country in a matter of moments. They hold their finger on the button of multiple financial nuclear bombs, and to this day there are people that still pretend as if they are a mere moderating presence subservient to the White House or Congress.

This is a fallacy proven by history and the admissions from central bankers own mouths. The Fed answers to no one in our government. They answer to a different set of masters, and the blame for the consequences of their policies falls to them and their cohorts.

Last year I published an article titled ‘The Fed’s Catch-22 Taper Is A Weapon, Not A Policy Error.’ In that article I predicted that the Fed would embark on a hiking spree on interest rates in response to inflationary/stagflationary events. I noted that:

We are now at that stage again where price inflation tied to money printing is clashing with the stock market’s complete reliance on stimulus to stay afloat. There are some that continue to claim the Fed will never sacrifice the markets by tapering. I say the Fed does not actually care, it is only waiting for the right time to pull the plug on the US economy.”

At the time I received a lot of resistance to the idea. The usual argument was: “The fed will never raise rates and put stock markets at risk. Why would they destroy the golden goose?”

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The Federal Reserve Wants You Fired, by Ron Paul

Business cycle swings became much more pronounced after the establishment of the Federal Reserve. From Ron Paul at ronpaulinstitute.org:

The Federal Reserve was no doubt troubled by July’s decline in the US unemployment rate to 4.5 percent and increase in job openings to 11.2 million. This is because the Fed’s strategy for reducing the historic price inflation now plaguing the economy — caused by the Fed’s unprecedented low or zero interest rate policies — is to increase unemployment in order to decrease consumer spending. In his speech to the annual monetary policy conference in Jackson Hole, Wyoming, Fed Chair Jerome Powell reiterated his commitment to increasing unemployment, or, as he puts it, “softening the labor markets.”

Powell is correct that reducing price inflation is urgent. He is also correct that doing so will increase unemployment and slow economic growth. The Fed’s efforts to bring down inflation by increasing interest rates will also make it harder for average Americans to obtain home mortgages, purchase a car, or even pay their utility bills. Those hardest hit by the Fed’s “softening of labor markets” are also the primary victims of the Fed-created price inflation. This demonstrates the insanity and cruelty of the fiat money system, which enriches the elites while improvising [impoverishing] the masses.

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Ron Paul Reveals Exactly How Much the Federal Reserve Has Already Robbed You, by Ron Paul

Central banking and fiat banking rob people blind. From Ron Paul at birchgold.com:

Ron Paul Reveals Exactly How Much the Federal Reserve Has Already Robbed You

Photo CC BY-SA 2.0 by Gage Skidmore
Even after decades educating Americans on economics and liberty, I’m still amazed by the number of people who have no idea what the Federal Reserve is or what they do.

Sometimes, if put on the spot, folks will hazard a guess.

“They’re a bank, right?” Sort of, but not really.

“They’re the ones who make the stock market go up.” While that’s true, it’s not actually their job to pull the strings on Wall Street.

“They print money, don’t they?” True! Technically, the Bureau of Engraving and Printing, a subsidiary of the Department of the Treasury, physically produces greenbacks (or Federal reserve notes, or dollars).

What the Federal Reserve does is decide the total supply of dollars, and then create or destroy (but usually create) however many dollars they think the world needs.

Thus, as I explained in my article Forget about the gold standard, let’s talk about the copper standard, the Federal Reserve is in charge of either creating or destroying inflation. Mostly creating!

Today, I’m going to show you exactly how the Federal Reserve has abused their inflationary powers to steal from you. If you’re not absolutely furious by the time you’re done reading this article, well, call the Pope – you must be a saint!

If, like me, you’re not a saint, get ready to feel your blood boil…

Inflation robs responsible savers, rewards debtors

When my father was getting ready to retire back in the 60s, his nest egg was invested very conservatively in CDs at the bank. That made sense for him, because at the time, banks paid 2-3% over the rate of inflation. He didn’t have to worry about the value of his money declining faster than it grew.

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The Engineered Stagflationary Collapse Has Arrived – Here’s What Happens Next, by Brandon Smith

The Fed intends to blow things up to pave the way for a globalist monetary system. From Brandon Smith at alt-market.com:

In my 16 years as an alternative economist and political writer I have spent around half that time warning that the ultimate outcome of the Federal Reserve’s stimulus model would be a stagflationary collapse. Not a deflationary collapse, or an inflationary collapse, but a stagflationary collapse. The reasons for this were very specific – Mass debt creation was being countered with MORE debt creation while many central banks have been simultaneously devaluing their currencies through QE measures. On top of that, the US is in the unique position of relying on the world reserve status of the dollar and that status is diminishing.

It was only a matter of time before the to forces of deflation and inflation met in the middle to create stagflation. In my article ‘Infrastructure Bills Do Not Lead To Recovery, Only Increased Federal Control’, published in April of 2021, I stated that:

Production of fiat money is not the same as real production within the economy… Trillions of dollars in public works programs might create more jobs, but it will also inflate prices as the dollar goes into decline. So, unless wages are adjusted constantly according to price increases, people will have jobs, but still won’t be able to afford a comfortable standard of living. This leads to stagflation, in which prices continue to rise while wages and consumption stagnate.

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How Quantitative Tightening Ends, by MN Gordon

When the pain level gets too high, QT4 will end the same way QT’s 1, 2, and 3 ended—with a quick reversal by the Fed and the initiation of another massive QE. From MN Gordon at economicprism.com:

The pursuit of decadence is always met with the painful reality that stopping the excess is much more difficult than starting.  This realization, like a killer in the night, lies in wait until just after the point of no return.  When the certain destruction cannot be undone.

John Maynard Keynes, Fabian socialist and the godfather of modern day economic planning, in his 1935 work, The General Theory of Employment, Interest and Money, wrote:

“Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.”

In late November 2008, then Federal Reserve Chairman Ben Bernanke committed a fait accompli.  Though he may not have realized it at the time; he was blinded by his scholarly prejudices.

Bernanke, a smug Great Depression history buff of the highest academic pedigree, gazed back 80-years, observed several credit market parallels, and then made a preconceived diagnosis.

After that, he picked up his desktop copy of A Monetary History of the United States, by Milton Friedman and Anna Schwartrz, turned to the chapter on the Great Depression, and got to work inflating the money supply.

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The Big Questions We Should All Be Asking Geopolitically, by Tom Luongo

The biggest question is: can nuclear war be ruled out? Unfortunately the answer is no. From Tom Luongo at tomluongo.me:

To say that current events are ‘messy’ today would be the height of understatement. Everyday the headlines blare at us some new set of contradictory data points convincing us of some lie that serves someone’s purpose.

No matter how hard we try to keep up with things, cutting out the extraneous to find the nuggets of signal from the jungle of noise is more than a full-time job.

Sometimes, however, it’s best to take a few steps back, fall back on first principles and remind ourselves who the players are, what they want and then ask the big question of each of them… are they succeeding?

But to even ask that question we have to ask ourselves honestly the following question:

“What will they be willing to do to survive under present circumstances?”

This is the most uncomfortable question you can ever ask anyone. What would you do to survive? To protect your family? Your position? Your conception of yourself?

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Powell’s “Soft Landing” Is Impossible, by Daniel Lacalle

Assume crash positions, because we are sure not headed for a soft landing. From Daniel Lacalle at dlacalle.com:

After more than a decade of chained stimulus packages and extremely low rates, with trillions of dollars of monetary stimulus fuelling elevated asset valuations and incentivising an enormous leveraged bet on risk, the idea of a controlled explosion or a “soft landing” is impossible.

In an interview with Marketplace, Federal Reserve chairman admitted that “a soft landing is really just getting back to 2% inflation while keeping the labor market strong. And it’s quite challenging to accomplish that right now”. He went on to say that “nonetheless, we think there are pathways … for us to get there.”

The first problem of a soft landing is the evidence of the weak economic data. While headline unemployment rate appears robust, both the labor participation and employment rate show a different picture, as they have been stagnant for almost a year. Both the labor force participation rate, at 62.2 percent, and the employment-population ratio, at 60.0 percent remain each 1.2 percentage points below their February 2020 values, as the April Jobs Report shows. Real wages are down, as inflation completely eats away the nominal wage increase. According to the Bureau of Labor Statistics, real average hourly earnings decreased 2.6 percent, seasonally adjusted, from April 2021 to April 2022. The change in real average hourly earnings combined with a decrease of 0.9 percent in the average workweek resulted in a 3.4-percent decrease in real average weekly earnings over this period.

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