It’s Game Over for the Fed—Expect a Monetary “Rug Pull” Soon… - Politics Forum.org | PoFo

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#15243030
It’s Game Over for the Fed—Expect a Monetary “Rug Pull” Soon…

Image



by Nick Giambruno

You often hear the media, politicians, and financial analysts casually toss around the word “trillion” without appreciating what it means.

A trillion is a massive, almost unfathomable number.

The human brain has trouble understanding something so huge. So let me try to put it into perspective.

If you earned $1 per second, it would take 11 days to make a million dollars.

If you earned $1 per second, it would take 31 and a half years to make a billion dollars.

And if you earned $1 per second, it would take 31,688 years to make a trillion dollars.

So that’s how enormous a trillion is.

When politicians carelessly spend and print money measured in the trillions, you are in dangerous territory.

And that is precisely what the Federal Reserve and the central banking system have enabled the US government to do.

From the start of the Covid hysteria until today, the Federal Reserve has printed more money than it has for the entire existence of the US.

For example, from the founding of the US, it took over 227 years to print its first $6 trillion. But in just a matter of months recently, the US government printed more than $6 trillion.

During that period, the US money supply increased by a whopping 41%.

In short, the Fed’s actions amounted to the biggest monetary explosion that has ever occurred in the US.

Initially, the Fed and its apologists in the media assured the American people its actions wouldn’t cause severe price increases. But unfortunately, it didn’t take long to prove that absurd assertion false.

As soon as rising prices became apparent, the mainstream media and Fed claimed that the inflation was only “transitory” and that there was nothing to be worried about. Then, when the inflation was obviously not “transitory,” they told us “inflation was actually a good thing.”

Of course, they were dead wrong and knew it—they were gaslighting.

The truth is that inflation is out of control, and nothing can stop it.

Even according to the government’s own crooked CPI statistics—which understates reality—inflation is breaking through 40-year highs. That means the actual situation is much worse.

No Inflation Without Representation

The US federal government’s deficit spending and debt are the most significant factors driving this money printing, resulting in drastic price increases.

The US federal government has the biggest debt in the history of the world. And it’s continuing to grow at a rapid, unstoppable pace.

It took until 1981 for the US government to rack up its first trillion in debt. After that, the second trillion only took four years. The next trillions came in increasingly shorter intervals.

Today, the US federal debt has gone parabolic and is well over $30 trillion.

If you earned $1 per second, it would take over 966,484 YEARS to pay off the US federal debt.

And that’s with the unrealistic assumption that it would stop growing.

The truth is, the debt will keep piling up unless Congress makes some politically impossible decisions to cut spending. But don’t count on that happening. In fact, they’re racing in the opposite direction now that they’ve normalized multitrillion-dollar deficits.

Below is a chart of the Congressional Budget Office’s deficit projections for the next decade. These estimates will almost certainly be too rosy, as they often are.

Image

Even by the CBO’s optimistic projections, the US government will have a cumulative deficit of over $15 trillion for the next ten years.

So, who is going to finance these incomprehensible shortfalls? The only entity capable is the Fed’s printing presses.

Allow me to simplify it in three steps.

Step #1: Congress spends trillions more than the federal government takes in from taxes.

Step #2: The Treasury issues debt to cover the difference.

Step #3: The Federal Reserve creates currency out of thin air to buy the debt.

In short, this insidious process is nothing more than legalized counterfeiting. It’s taxation without consent via currency debasement and is the true source of inflation. Mainstream media and economists perform incredible mental gymnastics to conceal and justify this fraud.

That’s how government spending, deficits, and the federal debt affect inflation.

As long as the average person doesn’t notice the rising prices, the system works well. However, once the price increases become painful enough, it creates political pressure for the Fed to combat inflation by raising interest rates.

The Fed Has a Serious Problem This Time

The amount of federal debt is so extreme that even a return of interest rates to their historical average would mean paying an interest expense that would consume more than half of tax revenues. Interest expense would eclipse Social Security and defense spending and become the largest item in the federal budget.

Further, with price increases soaring to 40-year highs, a return to the historical average interest rate will not be enough to reign in inflation—not even close. A drastic rise in interest rates is needed—perhaps to 10% or higher. If that happened, it would mean that the US government is paying more for the interest expense than it takes in from taxes.

In short, the Federal Reserve is trapped.

Raising interest rates high enough to dent inflation would bankrupt the US government.

We can see this dynamic in the below chart of the federal debt and the federal funds rate, the Federal Reserve’s primary benchmark interest rate. The higher the federal debt, the harder and more painful it becomes to raise interest rates.

Image

In short, the US government is fast approaching the financial endgame. It needs to raise interest rates to combat out-of-control inflation… but can’t because it would cause its bankruptcy.

In other words, it’s game over.

They have no choice but to “reset” the system—that’s what governments do when they are trapped.

Think of it like this.

Imagine a spoiled child playing a board game, and rather than admit he is losing, he flips the board. This is what governments will do now that they are financially checkmated. They can’t win, even in their own rigged game, and now are left with the choice of losing power or flipping the board. Since power does not relinquish itself voluntarily, we should presume they’ll choose to flip the board.

Here’s the bottom line.

The current monetary system is on its way out. Even the central bankers running the system can see that. So they are preparing for what comes next as they attempt to “reset” the system.

I suspect it could all go down soon… and it’s not going to be pretty.

It’s going to result in an enormous wealth transfer from you to the parasitical class—politicians, central bankers, and those connected to them.

Editor’s Note: The economic trajectory is troubling. Unfortunately, there’s little any individual can practically do to change the course of these trends in motion.


https://internationalman.com/articles/i ... pull-soon/
#15243123
BlutoSays wrote:



In short, the US government is fast approaching the financial endgame. It needs to raise interest rates to combat out-of-control inflation… but can’t because it would cause its bankruptcy.



It’s going to result in an enormous wealth transfer from you to the parasitical class—politicians, central bankers, and those connected to them.



Where's the 'wealth' for the 'wealth-transfer' supposed to *come from*, if not from additional government debt -- which is no longer an option, according to the article, and also empirically.

(Basically raised / higher interest rates means rewarding *pre-existing* (rentier) capital, which is *non-productive* of commodities -- which is an *expense*, along with all other kinds of government spending. It's 'neo-feudalism', because it's certainly not *capitalism*, or new-commodity-producing equity-values at that point.)
#15243155
Yes, interest rates have been raised. Are you seeing higher interest rates in bank instruments as was seen in the 70's? Higher interest on savings accounts?

Meanwhile, there's a push on for more digital money and electronic banking. It nicely falls into place if there's a crisis and there's suddenly a "bail-in" (not a bail-out) for banks in trouble. Much easier for governments to flip bits than take physical property from people.

- - -

" *pre-existing* (rentier) capital, which is *non-productive* of commodities -- which is an *expense* "

Don't know what that means. The rich have their money invested in the economy in companies and funds, which are reinvested around and around in a circle. So are retirement funds. I don't think too many people have stacks and stacks of hundreds sitting in their safety deposit box.

As I've said previously, we haven't had capitalism for close to 100 years. Section 8 housing, Social Security, Medicare, endless welfare programs, government green spending, the government spending close to 40% of the GDP every year for the last several years would not exist under capitalism.
#15243175
BlutoSays wrote:
Yes, interest rates have been raised. Are you seeing higher interest rates in bank instruments as was seen in the 70's? Higher interest on savings accounts?

Meanwhile, there's a push on for more digital money and electronic banking. It nicely falls into place if there's a crisis and there's suddenly a "bail-in" (not a bail-out) for banks in trouble.



What happened to your initial *alarmism* -- the title of this thread points to the lack of remaining maneuvering-room for the Fed, over interest rates / deficit spending / money-printing.

Are you actually now *championing* big-statism here, like 'Oh, yeah, 2008-2009 was *fine* -- that's what's *supposed* to happen, 'cause, y'know, banks can't really sustain *themselves*. Gosh golly-gee.'

Are you somehow *monetizing* your posts here, so that your incentive is to always post sensationalist alarmism that doesn't even 'have' to be consistent in its politics?

What's funny is that, on *this* point / thread-topic, you happen to be empirically *correct*, but now you can't even *stick to it*, and you're abandoning your usual 'big-gubmint' criticism, in favor of *supporting* any government action that *does* bail out the private sector, as in 2020.


BlutoSays wrote:
Much easier for governments to flip bits than take physical property from people.

- - -



You're indicating that you'd now *prefer* to see the Keynesian-type big-government deficit spending ('money-printing'), to keep capitalism on life-support, rather than use eminent domain to turn vacant, non-performing factories over to those who *work* there.

A *landscape* of hollowed-out workplaces, shells-of-their-former-selves, all because private ownership doesn't have enough 'liquidity' on-paper to keep such structures functioning.

And you expect the rest of society to *go along* with this bullshit? Really?


ckaihatsu wrote:
" *pre-existing* (rentier) capital, which is *non-productive* of commodities -- which is an *expense* "



BlutoSays wrote:
Don't know what that means.



Oh, it just means that the *past* is different from the *future*, and if society / government policy valorizes the *past* (pre-existing rentier-type capital), then those subsidies to the 'past' actually take-away from investment in the *future*, since any given dollar can't go to *both* pre-existing shit while *also* funding future speculative economic activity / commodity-production.


BlutoSays wrote:
The rich have their money invested in the economy in companies and funds, which are reinvested around and around in a circle. So are retirement funds. I don't think too many people have stacks and stacks of hundreds sitting in their safety deposit box.

As I've said previously, we haven't had capitalism for close to 100 years. Section 8 housing, Social Security, Medicare, endless welfare programs, government green spending, the government spending close to 40% of the GDP every year for the last several years would not exist under capitalism.



Time to come-clean, then, BS -- should there be big-government, as to bail-out banks, or shouldn't there -- ?

Do you want 'lean-and-mean' 'minarchist' government, that wouldn't provide subsidies to the private sector, or to individuals, or *don't* you -- ?
#15243180
BlutoSays wrote:It’s Game Over for the Fed—Expect a Monetary “Rug Pull” Soon…

Image



by Nick Giambruno

You often hear the media, politicians, and financial analysts casually toss around the word “trillion” without appreciating what it means.

A trillion is a massive, almost unfathomable number.

The human brain has trouble understanding something so huge. So let me try to put it into perspective.

If you earned $1 per second, it would take 11 days to make a million dollars.

If you earned $1 per second, it would take 31 and a half years to make a billion dollars.

And if you earned $1 per second, it would take 31,688 years to make a trillion dollars.

So that’s how enormous a trillion is.

When politicians carelessly spend and print money measured in the trillions, you are in dangerous territory.

And that is precisely what the Federal Reserve and the central banking system have enabled the US government to do.

From the start of the Covid hysteria until today, the Federal Reserve has printed more money than it has for the entire existence of the US.

For example, from the founding of the US, it took over 227 years to print its first $6 trillion. But in just a matter of months recently, the US government printed more than $6 trillion.

During that period, the US money supply increased by a whopping 41%.

In short, the Fed’s actions amounted to the biggest monetary explosion that has ever occurred in the US.

Initially, the Fed and its apologists in the media assured the American people its actions wouldn’t cause severe price increases. But unfortunately, it didn’t take long to prove that absurd assertion false.

As soon as rising prices became apparent, the mainstream media and Fed claimed that the inflation was only “transitory” and that there was nothing to be worried about. Then, when the inflation was obviously not “transitory,” they told us “inflation was actually a good thing.”

Of course, they were dead wrong and knew it—they were gaslighting.

The truth is that inflation is out of control, and nothing can stop it.

Even according to the government’s own crooked CPI statistics—which understates reality—inflation is breaking through 40-year highs. That means the actual situation is much worse.

No Inflation Without Representation

The US federal government’s deficit spending and debt are the most significant factors driving this money printing, resulting in drastic price increases.

The US federal government has the biggest debt in the history of the world. And it’s continuing to grow at a rapid, unstoppable pace.

It took until 1981 for the US government to rack up its first trillion in debt. After that, the second trillion only took four years. The next trillions came in increasingly shorter intervals.

Today, the US federal debt has gone parabolic and is well over $30 trillion.

If you earned $1 per second, it would take over 966,484 YEARS to pay off the US federal debt.

And that’s with the unrealistic assumption that it would stop growing.

The truth is, the debt will keep piling up unless Congress makes some politically impossible decisions to cut spending. But don’t count on that happening. In fact, they’re racing in the opposite direction now that they’ve normalized multitrillion-dollar deficits.

Below is a chart of the Congressional Budget Office’s deficit projections for the next decade. These estimates will almost certainly be too rosy, as they often are.

Image

Even by the CBO’s optimistic projections, the US government will have a cumulative deficit of over $15 trillion for the next ten years.

So, who is going to finance these incomprehensible shortfalls? The only entity capable is the Fed’s printing presses.

Allow me to simplify it in three steps.

Step #1: Congress spends trillions more than the federal government takes in from taxes.

Step #2: The Treasury issues debt to cover the difference.

Step #3: The Federal Reserve creates currency out of thin air to buy the debt.

In short, this insidious process is nothing more than legalized counterfeiting. It’s taxation without consent via currency debasement and is the true source of inflation. Mainstream media and economists perform incredible mental gymnastics to conceal and justify this fraud.

That’s how government spending, deficits, and the federal debt affect inflation.

As long as the average person doesn’t notice the rising prices, the system works well. However, once the price increases become painful enough, it creates political pressure for the Fed to combat inflation by raising interest rates.

The Fed Has a Serious Problem This Time

The amount of federal debt is so extreme that even a return of interest rates to their historical average would mean paying an interest expense that would consume more than half of tax revenues. Interest expense would eclipse Social Security and defense spending and become the largest item in the federal budget.

Further, with price increases soaring to 40-year highs, a return to the historical average interest rate will not be enough to reign in inflation—not even close. A drastic rise in interest rates is needed—perhaps to 10% or higher. If that happened, it would mean that the US government is paying more for the interest expense than it takes in from taxes.

In short, the Federal Reserve is trapped.

Raising interest rates high enough to dent inflation would bankrupt the US government.

We can see this dynamic in the below chart of the federal debt and the federal funds rate, the Federal Reserve’s primary benchmark interest rate. The higher the federal debt, the harder and more painful it becomes to raise interest rates.

Image

In short, the US government is fast approaching the financial endgame. It needs to raise interest rates to combat out-of-control inflation… but can’t because it would cause its bankruptcy.

In other words, it’s game over.

They have no choice but to “reset” the system—that’s what governments do when they are trapped.

Think of it like this.

Imagine a spoiled child playing a board game, and rather than admit he is losing, he flips the board. This is what governments will do now that they are financially checkmated. They can’t win, even in their own rigged game, and now are left with the choice of losing power or flipping the board. Since power does not relinquish itself voluntarily, we should presume they’ll choose to flip the board.

Here’s the bottom line.

The current monetary system is on its way out. Even the central bankers running the system can see that. So they are preparing for what comes next as they attempt to “reset” the system.

I suspect it could all go down soon… and it’s not going to be pretty.

It’s going to result in an enormous wealth transfer from you to the parasitical class—politicians, central bankers, and those connected to them.

Editor’s Note: The economic trajectory is troubling. Unfortunately, there’s little any individual can practically do to change the course of these trends in motion.


https://internationalman.com/articles/i ... pull-soon/


Yeah Trump the gold standard in the parasitical class—politicians, central bankers, and those connected to them.
#15243577
BlutoSays wrote:0.010% to 0.020% interest annually on a bank accounts (savings, checking, moneymarket). That's keeping up with the benchmark rate?


A regular savings account never keeps up. Chasing interest returns on your money via savings accounts has always been a losers game. This is not new.

Placing money in a savings account is as good as hiding it under the mattress. If you want to preserve the value, you gotta go bonds, or at least CDs. This has always been true.
Last edited by Rancid on 19 Aug 2022 17:09, edited 2 times in total.
#15243588
late wrote:
Doug Casey "describes himself as an anarcho-capitalist[3] influenced by the works of novelist Ayn Rand. " Wiki

IOW, he's a nut.

He said a Great Depression was coming in 1979... In the over 40 years since, if there was a Great Depression; I missed it... Image



Petty-bourgeois or non-corporate farmer -- there's that natural confluence of political-economy models, between anarchism and (localist) capitalism, hence 'anarcho-capitalism'. Anarchists want localism without money, while (petty) capitalists want localism *with* money, and probably with slavery, too.
#15243590
ckaihatsu wrote:
Anarchists want localism without money, while (petty) capitalists want localism *with* money, and probably with slavery, too.



I think you actually have a point there.

Koch, and his pals, have been dragging the country to the Right for over 40 years. Their economic guru was a nutter by the name of Buchanan.

Buchanan was a Southerner, and thought slavery (or something damn close to it) was the natural condition for most. And that they should be ruled by a small elite. If that sounds like the South before the Civil War, that's because it is.

Which is beyond crazy, it's trying to bring back feudalism, and it's definitely not capitalist in the modern sense of the word.
#15243593
Then everyone would go to their servitude posts , we're all playing with words here. The only thing I ever saw was servitude is in the constitution and apprenticeship, only labor was demanded of the servitude, that African Americans are raised in manhood from the still wilds of Africa, that they have their own money, that nothing but their labor was due, that its a lie that they were banned from reading, that all crimes are universal in the whole Union. Population projections favorable African American numbers throughout, disease frontier conditions medical care top cause of deaths, the capitalist triangle trade lost a leg, its still in effect, give cotton to Britain, get the Victorian furniture fashion, tariff means grow home-production, arbitrarily halt trades with artificial barriers to one producer over another. All the false Union loyalists tend to underline the route to tyranny. All the nukes should be focused inward. All the chants should be inwards. Didn't this School Pledge , it is Direct Proud descendent of it, all toddlers will chant mindless education "I pledge allegiance..."
Nearly every loyalist sees the right of a President to get a laser sattelite to *poof* the misplaced word in the united occupation zones.
#15243594
late wrote:
I think you actually have a point there.

Koch, and his pals, have been dragging the country to the Right for over 40 years. Their economic guru was a nutter by the name of Buchanan.

Buchanan was a Southerner, and thought slavery (or something damn close to it) was the natural condition for most. And that they should be ruled by a small elite. If that sounds like the South before the Civil War, that's because it is.

Which is beyond crazy, it's trying to bring back feudalism, and it's definitely not capitalist in the modern sense of the word.



Maybe I have to read up on it, but is the Koch thing *corporate* (public), or is it all private equity? If it's all private equity then it makes a lot of sense because that would be a big bundle to play with.
#15243595

Koch Industries, Inc. (/ˈkoʊk/) is an American privately held multinational conglomerate corporation based in Wichita, Kansas and is the second-largest privately held company in the United States, after Cargill.[2] Its subsidiaries are involved in the manufacturing, refining, and distribution of petroleum, chemicals, energy, fiber, intermediates and polymers, minerals, fertilizer, pulp and paper, chemical technology equipment, cloud computing, finance, commodity market trading, and investments. Koch owns Flint Hills Resources, Georgia-Pacific, Guardian Industries, Infor, Invista, KBX, Koch Ag & Energy Solutions, Koch Engineered Solutions, Koch Investments Group, Koch Minerals & Trading, and Molex. The firm employs 122,000 people in 60 countries, with about half of its business in the United States.[2][1][5]



https://en.wikipedia.org/wiki/Koch_Industries



---


Okay, yeah, that's why -- it's the 'robber barons' of today.
#15243597
ckaihatsu wrote:
Maybe I have to read up on it, but is the Koch thing *corporate* (public), or is it all private equity? If it's all private equity then it makes a lot of sense because that would be a big bundle to play with.



Koch has a number of pals that chip in.

Koch controls over a hundred organisations, he has his fingers in a LOT of pies.

But, no, it's not all private equity, that's your ideology leading you astray, yet again.
#15243598
late wrote:
Koch has a number of pals that chip in.

Koch controls over a hundred organisations, he has his fingers in a LOT of pies.

But, no, it's not all private equity,



It's "not" -- how so on *that* one?



privately held multinational conglomerate



https://en.wikipedia.org/wiki/Koch_Industries



(I mean to compare the current situation to that of *pre-Fed* U.S. economic history, where private equity -- similar titans -- was on-the-hook for its own kraken, that of stock market crashes and runs on the banks.)

The *difference* between then and now, contextually, is in value, and relative historical-progressivism.


---


late wrote:
that's your ideology leading you astray, yet again.



My 'ideology' made me mess-up on the basic facts? I don't *think* so -- see above.
#15243600
ckaihatsu wrote:

(I mean to compare the current situation to that of *pre-Fed* U.S. economic history, where private equity -- similar titans -- was on-the-hook for its own kraken, that of stock market crashes and runs on the banks.)

The *difference* between then and now, contextually, is in value, and relative historical-progressive


My 'ideology' made me mess-up on the basic facts? I don't *think* so -- see above.



You may have intended to compare them, but I don't see the relevance.

Still don't get it..

You want to jump to conclusions.
#15243601
late wrote:
You may have intended to compare them, but I don't see the relevance.

Still don't get it..

You want to jump to conclusions.



Is this your *blind spot* -- you think historical private monopolies over key economic industries ('robber barons') are *not* comparable to such private equity today -- ?

The latest *I've* seen is typical 'libertarians' starting to praise *robber barons* (yup), from the Gilded Age.
#15243603

Wealth disparity

The unequal distribution of wealth remained high during this period. From 1860 to 1900, the wealthiest 2% of American households owned more than a third of the nation's wealth, while the top 10% owned roughly three-quarters of it.[61] The bottom 40% had no wealth at all.[59] In terms of property, the wealthiest 1% owned 51%, while the bottom 44% claimed 1.1%.[59]

Historian Howard Zinn argues that this disparity along with precarious working and living conditions for the working classes prompted the rise of populist, anarchist, and socialist movements.[62][63] French economist Thomas Piketty notes that economists during this time, such as Willford I. King, were concerned that the United States was becoming increasingly inegalitarian to the point of becoming like old Europe, and "further and further away from its original pioneering ideal."[64]

According to economist Richard Sutch in an alternative view of the era, the bottom 25% owned 0.32% of the wealth while the top 0.1% owned 9.4%, which would mean the period had the lowest wealth gap in recorded history. He attributes this to the lack of government interference.[65]

There was a significant human cost attached to this period of economic growth,[66] as American industry had the highest rate of accidents in the world.[67] In 1889, railroads employed 704,000 men, of whom 20,000 were injured and 1,972 were killed on the job.[68] The U.S. was also the only industrial power to have no workman's compensation program in place to support injured workers.[67]



https://en.wikipedia.org/wiki/Gilded_Ag ... _disparity
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