Tag: End The Fed

From Birch Gold Group

Since 2008 there have been numerous examples where the Federal Reserve has protected the wealthy elite while failing both Main Street citizens and the U.S. economy as a whole.

Right now, Chairman Jerome Powell stands at the center of another major failure to live up to the Fed’s mandates to keep inflation in check (remember that 2% target?) and unemployment under control.

In a recent column appropriately titled “Federal Reserve Failure,” retired Congressman Ron Paul took the Fed to task on their monetary policy decisions. In it, he issued a criticism of their recent announcement to begin “tapering” billions in bond-buying:

Continue reading “Tweedledee? Tweedledum? Either Way, You’re Paying the Bill”

Guest Post by Ron Paul

What do the Federal Reserve and neoconservatives have in common? They both refuse to admit that their policies — the neocons’ promotion of perpetual war and the Fed’s manipulation of the money supply — are complete failures, having produced the opposite of the promised results.

The latest example of the Federal Reserve engaging in Bill Kristol-like levels of denial is the Fed’s continued insistence that the return of 70s-style inflation is a “transitory” phenomenon resulting from the end of the lockdowns. The Fed has acknowledged the “transitory” inflation will last until at least 2022, yet it is still determined to keep interest rates at or near zero until the “jobs situation” improves.

Continue reading “Federal Reserve Failure”

Via International Man

The Fed is the most profitable company in the world by far.

While it owns nothing except ultra-low-yielding government bills, notes, bonds and GSEs, in 2020 it nevertheless made more net income than Apple, Microsoft, JP Morgan, Facebook, McDonald’s, Coca-Cola, Walmart, Home Depot, Intel, Johnson & Johnson, Bank of America, Nike, Visa, Amazon, and Netflix combined.

Yes, combined!

The $322 billion of net profit was not a COVID-year aberration. The Fed has actually earned an average profit of $350 billion per year for the last decade.

So the question recurs: How does it earn such massive net income on assets that barely generate a yield?

The first order effect of unbridled central bank balance sheet expansion is far lower bond yields than would exist on the free market under a regime of sound money.

The mechanism by which this financial fraud is accomplished is plain as day. When the Fed buys Uncle Sam’s debt, bond supply shrinks, prices rise and yields fall. So doing, the Fed invites all economic actors to borrow like there is no tomorrow because it has deeply and deliberately falsified the cost of carry.

Eventually, the Fed’s money-pumping ultimately leads to CPI inflation. That’s because governments are induced to borrow at will to fund a ballooning level of transfer payments — the wherewithal for household spending which is not matched with an equivalent increase in the supply of goods and services.

Stated differently, the Fed exchanges fiat credits for real financial assets that Washington had previously issued to fund the purchase of labor, capital and technology resources.

The best way to understand today’s inflationary tidal wave and why we are in wholly uncharted monetary waters, is to review the Fed’s actual financial statements. They are almost never remarked upon, but they actually make the idea of creating money from thin air come dramatically alive because money printing is insanely profitable when you have a legal monopoly.

There is really no mystery as to why the Fed is so profitable: It harvests interest income from its $8.1 trillion asset portfolio like a normal bank, modest as the yields may be. But unlike commercial banks, the Fed’s funding costs or liabilities entail hardly any expense at all.

That’s because it prints them!

Editor’s Note: The truth is, we’re on the cusp of an economic crisis that could eclipse anything we’ve seen before. And most people won’t be prepared for what’s coming.

That’s exactly why bestselling author Doug Casey and his team just released a free report with all the details on how to survive an economic collapse.

Click here to download the PDF now.

Via International Man

Socialist central planning has been elevated to a new art form based on control of the economy from the commanding heights of finance.

Central banks were once in the money business, in the sense of securing its availability, liquidity, and stable value. But the contemporary Fed never says a peep about the place where money arises and dwells — the financial markets — while gumming endlessly about the Main Street economy and the condition of and its targets for the components and constituents of GDP.

During the last 43 years, total financial assets held by the household sector have increased by a staggering $100 trillion. And that’s just a proxy for the massive levels of bank deposits, money market funds, bonds, publicly traded shares, and private equities that flow through the warp and woof of the nation’s $21 trillion GDP.

Continue reading “David Stockman on the Feds Socialist Monetary Policies and What Comes Next”

Guest Post by Ron Paul

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.

Continue reading “The Fed Enabling Biden and Congress’ Destructive Agenda”

Via Birch Gold

In some cases, the idea of a “near-zero interest rate” is a good thing. For example, if you qualify for 0% interest when you buy a car, you save money.

But it’s much different when your retirement savings depends on getting a return on investment (ROI). In that case, near-zero interest rates can put pensions and other retirement accounts in serious jeopardy.

The Fed dropped interest rates to 0-0.25% starting last September. And according to the Wharton School of the University of Pennsylvania, those near-zero rates could stick around for a while:

Continue reading “Fed’s Near-Zero Rates Might Sound Good (Until This Happens)”

Via International Man

International Man: Recently, the calls for the Fed to add a third mandate to address racial and economic inequality have grown louder.

Will we see a redistribution of wealth soon?

Doug Casey: It seems the movement towards black “reparations” is building momentum. These things always start small, testing the water, then grow when nobody either laughs at them for being stupid or decries them as evil. Most Americans are now too intimidated and confused to do that, however.

It’s similar to MMT. A year ago, the notion of Modern Monetary Theory was too outrageous a notion for a sensible person to bother considering; now, it’s practically public policy.

And, incidentally, when I say “black,” I don’t capitalize the word, as very recent politically correct fashion dictates. Capitalizing it just emphasizes and accentuates racial differences—as do most “woke” practices.

Continue reading “Doug Casey on the Calls for Fed to Address Inequality, Climate Change, and More…”

Guest Post by Ron Paul

Some Federal Reserve officials are calling for tougher banking regulations in order to prevent the Fed’s low interest rate policy from leading investors to take “excessive” risks that will create asset bubbles. The Fed is understandably worried that these bubbles will burst leading to another market meltdown. However, the boom-and-bust cycle will not end because regulators stop investors from taking “excessive” risks. Almost every bubble and economic downturn America has experienced over the past 107 years was caused by the Federal Reserve’s manipulation of the money supply. Continue reading “The Crack-Up is Coming”

Guest Post by Ron Paul

House Financial Services Chair Maxine Waters and Senator Elizabeth Warren have introduced the Federal Reserve Racial and Economic Equity Act. This legislation directs the Federal Reserve to eliminate racial disparities in income, employment, wealth, and access to credit.

Eliminating racial disparities in access to credit is code for forcing banks and other financial institutions to approve loans based on the applicants’ race, instead of based on their income and credit history. Overlooking poor credit history or income below what would normally be required to qualify for a loan results in individuals ending up with ruinous debt. These individuals will end up losing their homes, cars, or businesses because banks disregarded sound lending practices in an effort to show they are meeting race-based requirements.

Continue reading “Can the Fed End Racism?”

Guest Post by Ron Paul

Federal Reserve Chairman Jerome Powell recently announced that the Fed is abandoning “inflation targeting” where the Fed aims to maintain a price inflation rate of up to two percent. Instead, the Fed will allow inflation to remain above two percent to balance out periods of lower inflation. Powell’s announcement is not a radical shift in policy. It is an acknowledgment that the Fed is unlikely to reverse course and stop increasing the money supply anytime soon.

Continue reading “The Fed’s Brilliant Plan? More Inflation and Higher Prices”