A troubling reality looms ahead…
The exact timing is uncertain, but a significant crisis is on the way, unmistakably visible on the horizon.
Is anyone in Washington genuinely concerned about our nation’s dire financial state? Do lawmakers realize that their stimulus packages are essentially financed through rampant money printing? Does House Financial Services Committee Chair Maxine Waters see any reason for alarm?
Surely, there must be some voices in the legislature who are horrified by the unchecked federal spending.
Are you appalled?
We certainly are. Unfortunately, there seems to be little we can do to halt this trajectory. The principles of fiscal conservatism have all but disappeared from the federal government’s agenda.
The majority of voters appear to favor lavish handouts from the national treasury. They demand free education, free food, free phones, free transportation, and free medications. Debt forgiveness is also on their wishlist. Above all, they yearn for free money.
Numerous representatives are urging the President to meet the voters’ demands—and fulfill the promises made by politicians. Specifically, they’re advocating for more stimulus checks. As noted by MoneyWise:
“Over 75 members of Congress believe there should be ongoing stimulus checks until the pandemic ends. They are urging President Joe Biden to include these checks in the $2.3 trillion infrastructure spending plan he is promoting.”
Interestingly, these stimulus checks have little relevance to infrastructure. Yet, that’s the allure of continuous stimulus payments during this seemingly endless pandemic era. Lawmakers can readily “include” them in virtually any proposal with just a simple earmark.
Endless Red Ink
The longer individuals rely on government handouts, the more dependent they become. Those who once supported themselves through their labor are now dependent on stimulus payments and generous unemployment benefits.
Why put in the effort when it’s easier and more profitable to do nothing?
At the same time, Washington is drowning in debt. Recently, the U.S. Treasury Department released its Monthly Treasury Statement.
It’s doubtful that Treasury Secretary Janet Yellen paid much attention to it. However, if she had, she would have learned that the federal government has already accumulated a $1.7 trillion budget deficit for fiscal year 2021.
This fiscal year runs until the end of September. The reported deficit number from the Treasury was as of March—the halfway point of the fiscal year. At this pace, we could be looking at a staggering $3.4 trillion deficit for 2021, surpassing last year’s record deficit of $3.1 trillion.
The government registered a budget deficit of nearly $660 billion just in March. Back in 2017, the annual deficit stood at $666 billion, which was deemed irresponsible then.
Now, a $660 billion deficit in a single month hardly raises an eyebrow. Instead, Congress is clamoring for even more spending, larger deficits, stimulus earmarks, and an unshakeable commitment to fiscal recklessness.
Where is the funding coming from?
By now, anyone who has bothered to inquire is likely aware of the source of this money. And the origins are deeply misleading…
The Harsh Reality of Printing Press Money
The Federal Reserve simply adjusts its balance sheet—now exceeding $7.7 trillion—and just like that, new credit appears. The Fed loans this freshly created credit to the Treasury by purchasing Treasury notes, which are then allocated to various federal spending programs.
This rampant inflation of the money supply embodies inflation in its purest form, bringing about destructive outcomes.
John Maynard Keynes, the influential socialist and father of modern economic planning, wrote in his 1919 work, The Economic Consequences of the Peace:
“Through a continuous process of inflation, governments can covertly and unnoticed seize a significant portion of their citizens’ wealth. This method not only confiscates wealth but does so arbitrarily, enriching some while impoverishing many. Such arbitrary economic adjustments not only undermine security but also erode trust in the fairness of wealth distribution.”
“With inflation continuing and the real value of currency fluctuating dramatically, the foundational relationships between debtors and creditors—essential to capitalism—become nearly meaningless, leading the quest for wealth to degenerate into a gamble.”
Could this persistent inflation clarify the striking contrast between today’s newly minted bitcoin millionaires and the growing number of homeless encampments across the nation?
What about the stark differences in wealth between average Congressional representatives and typical plumbers?
And what can explain the growing gap between housing prices and incomes or market capitalizations and gross domestic product?
The Dow Jones Industrial Average has just crossed 34,000—could this be a joke?
Following rampant asset price inflation and speculative gambling comes consumer price inflation—the ultimate wealth destroyer.
This is the grim reality of printing press money, a truth that Fed Chair Powell and Treasury Secretary Yellen will never openly discuss as they tout the benefits of their inflationary policies.
Brace yourselves for impending turmoil.
Sincerely,
MN Gordon
for Economic Prism
Return from The Ugly Truth About Printing Press Money to Economic Prism
