History shows that in the long run fiat money always fails. The temptation for politicians to simply inflate the money supply to pay the bills, instead of cutting spending, grows and becomes irresistible.
Our rulers and their court economists tell us the reason the Fed exists is for your benefit citizen – why it stabilizes prices and regulates the economy! We need a printing press not to finance our nefarious activities, but for the well being of the people!
Since the end of the quasi-gold standard of Breton Woods in 1971, debt both public and private has exploded, US manufacturing has been shipped overseas, and income inequality has soared all directly related to monetary policy.
Federal debt has gone from $400 billion to $26 trillion; household debt $475B to $16.2T; corporate debt $180B to $6.7T. Since March the balance sheet has gone from $4T to $7T and the money supply from $17T to $21T. The deficit this year is $4T. Meanwhile savings are in the toilet while interest rates have been pegged at zero and, in an Orwellian fit, $15 trillion of debt worldwide has a negative yield. What happens when interest rates go up?
All great nations come to an end when they spend beyond their means. Political radicalization gains steam in moments of economic turmoil. The US has had two national banks that came and went. It is long past due that we take the idea of sound money seriously and end the Fed before it’s too late.
Printed in the Leelanau Enterprise August 6th, 2020