Recently, former Federal Reserve Chairman Ben Bernanke found the time to advise his past colleagues on how to manage the Fed’s balance sheet. Specifically, he suggested how much it should be reduced, essentially guiding them on how to rectify the consequences of his past actions.
It had been a while since we had heard from Bernanke, but it all came rushing back. He was making appearances on Bloomberg and Squawk Box, promoting the new paperback version of his falsely-titled memoir “The Courage to Act.” The last significant communication from him occurred when the hardcover was released in late 2015.
When it comes to the Fed’s balance sheet, Bernanke urged a reduction from $4.5 trillion to a range of $2.3 to $2.8 trillion. He didn’t elaborate on what this reduction would accomplish. A balance sheet of $2.8 trillion would still be approximately 300% higher than it was before the 2008 financial crisis.
By all accounts, Bernanke’s actions have been highly questionable. He is chiefly responsible for the chaotic state of the U.S. economy, having slashed the federal funds rate to near zero and expanded the Federal Reserve’s balance sheet by over 450%.
Despite the significant impact of his decisions, Bernanke remains unrepentant, convinced his strategies somehow rescued the economy. In reality, his policies hindered natural economic recovery and led to today’s asset and debt bubbles. While he may have saved the banking sector, other sectors faced severe challenges, especially following the Lehman Brothers collapse.
Big Dreams
It’s worth remembering that Bernanke encouraged Alan Greenspan to lower the federal funds rate to 1% and maintain it for a year after the dot-com bust. This decision was a major contributor to the mortgage lending crisis that followed.
In late 2002, he even delivered a speech ominously titled Deflation: Making Sure “It” Doesn’t Happen Here, where he confidently outlined his plan:
“[T]he U.S. government possesses a technology, called a printing press (or its electronic counterpart), that allows it to produce unlimited U.S. dollars at negligible cost. Increasing the dollar supply, or credibly threatening to do so, enables the government to lower the dollar’s value concerning goods and services, effectively raising their prices.”
As Fed Chair, Bernanke finally had his chance. After the mortgage bubble burst—a situation he helped create—he initiated extensive money supply expansion through quantitative easing.
He escalated the Fed’s balance sheet from under $1 trillion to over $4.5 trillion, an act he perceived as courageous. Unfortunately, we have endured the fallout of his policies, including slow growth, low bond yields, significant debt, inflated asset prices, stagnant wages, and currency devaluation, for nearly a decade. The situation is far from ideal.
So, what actions can you take?
Silver Security
A few weeks ago, we provided insight into how banks are exploiting you. Today, we offer a straightforward, effective method for you to protect yourself against your banker, the Federal Reserve, and the flawed fiat money system. For context, we reference Dr. Keith Weiner’s article titled Will Gold or Silver Pay the Higher Interest Rate?.
“[O]ver thousands of years, gold has not displaced silver. The reason is that these metals serve different purposes. Both are heavy, shiny, and resistant to tarnish, and they conduct heat and electricity well. However, their physical similarities can distract from their distinct roles.
“Gold became the preferred medium for transporting significant value across long distances. It was once cattle, as they could move by themselves. Today, gold can be transported anywhere in the world quickly. This global liquidity means that gold isn’t subjected to local shortages or gluts, making it the most liquid commodity.
“In contrast, silver was valued by wage earners, not for transporting large sums, but for preserving small amounts of wealth over time. Historically, salt served this purpose. Workers need to save value gradually for future needs, like purchasing groceries in retirement.
“Gold doesn’t fit well for this purpose since an ounce is often too much for most to buy frequently. Smaller denominations come with high premiums that diminish return upon selling. Silver, however, presents an accessible option for small savers. It’s regarded as the most hoardable commodity. Generally, wealthier individuals own gold, while many more people hold smaller quantities of silver.
“In summary, the wage earner with a modest stash of silver coins needs security more than interest.”
How to Stick It to Your Banker, the Federal Reserve, and the Whole Doggone Fiat Money System
If you already possess gold or silver, what follows may be familiar. However, if you’re a wage earner without any precious metals and don’t know where to fetch them, here’s a straightforward, effective method to counteract your banker and the flawed fiat system.
We keep it simple with a two-step approach everyone can follow:
Step 1: Visit your nearest ATM and withdraw $20.
Step 2: Head to your local coin shop and exchange your $20 for a 1-ounce silver eagle.
Congratulations! You’ve just transformed a potentially worthless piece of fiat currency into a debt-free, enduring store of value. How does that feel?
If you feel good about this exchange, consider repeating the process. Not only are you preparing for uncertain economic times, but you’re also diminishing your reliance on a flawed banking system and the Federal Reserve by reducing your holdings of dollar currency.
We are not advocating for you to close your bank accounts. A bank account is essential for transactions in the current financial landscape. However, that may not always be the case.
In essence, we encourage you to accumulate genuine wealth as a precaution against a scenario where banks and your deposits may fail when you need them most. It’s a consideration worth thinking about—everything is not as wonderful as Fed Chair Janet Yellen might suggest.
At the time of writing, silver trades at about $16.30 per ounce, which means your $20 should cover the cost of the coin and any dealer premiums.
So, what are you waiting for? Take action today!
Sincerely,
MN Gordon
for Economic Prism
