“The bank is something more than men, I tell you. It’s the monster. Men made it, but they can’t control it.” – John Steinbeck, The Grapes of Wrath
Mass Dollar Debasement
The monster of all monsters is rampaging far and wide. The Federal Reserve, the central bank responsible for issuing U.S. legal tender notes, is going big. But its aim is small.
The Fed’s working 24/7 with singleness of purpose. Fed Chairman Powell’s applying what Minneapolis Fed President Neel Kashkari recently called “infinite cash” to the financial system. The sole purpose is to destroy the dollar to save it. The stakes are high. The odds are higher.
The greatest asset bubble in human history, a bubble that was inflated by the Fed’s endless supply of cheap credit, has popped. At the same time, coronavirus containment measures have collapsed the economy. The forthcoming cascade of job losses, bankruptcies, oil gluts, and economic destruction could far exceed the Great Depression of the 1930s.
The economy may be toast. But the Fed’s doing anything and everything it can to salvage the dollar’s world reserve currency status. If the dollar falters, it’ll be game over for life as the world’s known it for the last 75 years.
Destroying the dollar to save it requires flooding the financial system with an infinite supply of cheap credit. In the short term, the Fed must bailout the big banks and big corporations without hesitation. But the Fed’s real objective is to inflate debts away via mass dollar debasement.
What to make of it?
Match Made In Hell
An obscene insult, if you’re in favor of what’s good and upright, is that the taxpayer – that’s you – is supplying cash to the Fed via the U.S. Treasury to make this all happen. A big chunk of the $2.2 trillion stimulus bill, auspiciously known as the CARES Act, is specifically for this purpose.
The mechanics of the Fed’s and Treasury’s match made in hell are both crude and obscure. But it is important you understand it. While it may make your blood boil. It will also shine a light on the breadth and depth of the fake money order we’re indentured to.
The Treasury, if you recall, is part of the Executive Branch. The Treasury gets its funding from taxpayers – including you. As part of the CARES Act, the Treasury just received $454 billion.
What’s the Treasury going to do with $454 billion? Is it going to allocate the $454 billion to different federal agencies and programs to spend into the economy? Is it going to increase the nation’s gold reserves?
Of course not. The Treasury, rather, is handing over the $454 billion – of taxpayer money – to the Federal Reserve. The Fed plans to lever this equity base up 10-to-1. The $454 billion contributed by taxpayers will turn into $4.5 trillion in credit.
Through this process, the Fed’s then going to supply this $4.5 trillion as credit to bailout big corporations – like Boeing. In effect, the Fed will take companies that would otherwise die, and will sustain them as zombies. What’s more, how the Fed goes about it, will be a secret…as noted by Zero Hedge:
“The Senate-approved stimulus bill repeals the sunshine law for the Fed’s meetings until the President says the coronavirus threat is over or the end of the year (spoiler alert: the coronavirus threat will never be over). That could make any FOIA lawsuits to disclose details of what is taking place in Fed meetings a non-starter since it has been codified in a federal law.”
Now if that doesn’t get you exercised, nothing will. But, wait, there’s more…
The Upside of The Great Depression of the 2020s
The Fed, the same bankers the Treasury just supplied $454 billion in taxpayer dollars to, is not only bailing out bankrupt American corporations. Come Monday, the Fed will be supplying cash to foreign central banks for temporary exchange of their Treasuries.
Specifically, the Fed’s launching a new liquidity facility on April 6. It’s called the foreign and international monetary authorities facility (FIMA Repo Facility). The purpose of the facility is to allow foreign central banks to exchange Treasuries held in custody at the Fed for U.S. dollars.
This is the seventh liquidity facility established by the Fed since the financial system seized up following the coronavirus-precipitated popping of the greatest asset bubble in human history. What’s going on? Aren’t Treasuries supposed to be the safest most liquid financial asset on earth?
Perhaps not. You see, foreign central banks have Treasuries. But they need dollars to make dollar payments. So they’re selling Treasuries to get dollars…and they’re selling a lot of them.
In fact, for the month of March, foreign central bank Treasuries held in custody at the Fed have declined by a record $109 billion. This marks the biggest monthly drop in history. It’s also why the Fed’s launching the FIMA Repo Facility.
There is, however, a much simpler much more elegant way to reconcile these imbalances. It doesn’t require a new liquidity facility. It doesn’t require Jay Powell pump liquidity all around the globe.
What is it?
Stop the madness. Allow markets to work. Let interest rates rise.
The financial system’s already collapsing. Why not let it collapse all the way? Would that be suicidal? Would the result be far too destructive?
Down would go the hopes and dreams of three generations, which may happen regardless. But the experience of having civilization uprooted and overturned as the final result of decades of maniac money changers does have an upside.
With a little luck, The Depression of the 2020s will gift the world honest banking for three generations or more.
for Economic Prism
Return from The Upside of The Great Depression of the 2020s to Economic Prism
Pingback: The Upside of The Great Depression of the 2020s – Thoughts For The Day
People are turning to Jesus lest they burn in a waterless eternity.This is a wake up call to the false,idolatrous culture.Men with buns & two poney tails,mocking the Bible is daily suicide. Lord wake up the church.
Thank you Pat for your wise words and your loving conviction in Jesus. I hope the Lord will use many people to wake up the church. The world definitely needs a wake up call right now.
I completely agree. We need honest money, not fiat currency. We need a much smaller government. We need a new, more equitable and simpler tax code. We need the complete abolishment of the federal reserve system, We need a free market health care system. We need John Cowperthwait. We need true Capitalism , and can someone please send our Constitution back. I MISS HER!
Be careful what you wish for; You may get it!
For years the Israelites had God as their King.
This is what Samuel warned them should they reject God as their King :
Be careful what you wish for, if you appoint someone as king this king will eventually confiscate the property, conscript the sons and daughters and impose a 10% tax on everything !
Well they have gone far beyond that !!!
So folk, there was the warning, the world chose, so lets not be surprised to see where we are at.
I missed the ” Upside “…. what a bait and switch article….
Pingback: Black Coffee: Running on Empty – Len Penzo dot Com
Once again governmental units make a mess out of
their policy actions. The need to provide “liquidity”
should tell a person, with a minimum level of common cents
that the system is in immediate peril. Of course, many a “volks”
know this, however, there is never any action to fix and repair;
all that is done is a patch or two. Hence, a same or similar event
is destined to occur again and again.
The FRS is impotent and merely an agent of the financial industry,
which sucks at the tit of the taxpayer. The banks and their co-harts,
such as the mortgage REITS, which borrow short and lend long, a
sure recipe for disaster that even a high sckool dropout could discern.
How many times does this cycle need to be played, before there is the
final systemic failure??
As the brilliant Albert Einstein once said, Two things are infinite, the
universe and human stupidity; and I’m not sure about the universe.