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The Federal Reserve Is Directly Monetizing US Debt

November 16, 2019

The Federal Reserve Is Directly Monetizing US Debt

In a very real way, MMT is already here

Sure, it’s not admitting to this. And it’s using several technical jinks and jives to offer a pretense that things are otherwise.

But it’s not terribly difficult to predict what’s going to happen next: the Federal Reserve will drop the secrecy and start buying US debt openly.

At a time, mind you, when US fiscal deficits are exploding and foreign buyers are heading for the exits.

How It’s Supposed to Work

Here’s how it’s supposed to work when the US government issues new debt:

  1. If the US Treasury needs to raise new funds, it announces an upcoming auction of US Treasury bills/notes/bonds.
  2. A date for the auction is set.
  3. Various participants bid for those bills/notes/bonds (including ‘regular folks’ like you and me if we’re using the government’s Treasury Direct program).
  4. At a later date, the Fed can buy those US Treasury bills/notes/bonds. The various holders of that debt submit offers to sell, and the Fed (presumably) selects the best offers on the best terms.

The Federal Reserve, under no conditions, buys Treasury paper directly.  The Federal Reserve’s own website still maintains that this is the case:

(Source)

There are two important claims plus one assertion I’ve highlighted in there, each in a different color:

  1. Yellow: Treasury securities may “only be bought and sold in the open market.”
  2. Blue: doing otherwise might compromise the independence of the Fed.
  3. Purple: the Fed mostly buys “old” securities.

So according to the Fed: it’s independent, it follows the rules set forth in the Federal Reserve Act of 1913, and it mostly buys “old” Treasury paper that the market has already properly priced in a free and fair system.

But that’s not really what’s going on…

 …click on the above link to read the rest of the article…

Is Washington Nuts? Increasing Spending AND Cutting Taxes Will EXPLODE The Size Of The National Debt

February 8, 2018

Is Washington Nuts? Increasing Spending AND Cutting Taxes Will EXPLODE The Size Of The National Debt

Our national debt is rapidly approaching 21 trillion dollars, and yet Congress wants to follow up a large tax cut bill with a massive increase in federal spending.  This is absolute madness, and it is going to make our long-term financial problems as a nation far worse.  After passing the tax bill, the appropriate thing to do would have been to cut federal spending.  Yes, that would have not been a positive thing for the economy in the short-term, but we must start addressing our long-term priorities.  If we do not do something about this exploding national debt, it could potentially destroy our republic all by itself.

Earlier today, I was absolutely horrified when I learned of a budget deal in the Senate that would increase federal spending by about 200 billion dollars in each of the next two years…

The Senate’s Republican and Democratic leaders unveiled a sweeping two-year budget agreement on Wednesday that would increase federal spending by hundreds of billions of dollars on domestic and defense programs alike.

That deal would eliminate strict budget caps, set in 2011 to reduce the federal deficit, and would allow Congress to spend about $200 billion more in the current fiscal year and in fiscal year 2019.

Seriously?

Our federal debt is going to hit 21 trillion dollars some time this year, and they want to throw hundreds of billions of dollars more spending on top of what we are already doing?

This alone is why we need true conservatives all over the nation to run for Congress.  Our endless greed is literally destroying the bright future that our children and our grandchildren were supposed to have.

…click on the above link to read the rest of the article…

Will America’s Prosperity Be Completely Wiped Out By Our Growing Debt?

October 30, 2017

Will America’s Prosperity Be Completely Wiped Out By Our Growing Debt?

The federal government is now 20.4 trillion dollars in debt, and most Americans don’t seem to care that the economic prosperity that we are enjoying today could be completely destroyed by our exploding national debt.  Over the past decade, the national debt has been growing at a rate of more than 100 million dollars an hour, and this is a debt that all of us owe.  When you break it down, each American citizen’s share of the debt is more than $60,000, and so if you have a family of five your share is more than $300,000.  And when you throw in more than 6 trillion dollars of corporate debt and nearly 13 trillion dollars of consumer debt, it is not inaccurate to say that we are facing a crisis of unprecedented magnitude.

Debt cannot grow much faster than GDP indefinitely.  At some point the bubble bursts, and when it does the pain that the middle class is going to experience is going to be off the charts.  Back in 2015, the middle class in the U.S. became a minority of the population for the first time ever.  Never before in our history has the middle class accounted for less than 50 percent of the population, and all over the country formerly middle class families are under a great deal of stress as they attempt to make ends meet.  The following comes from an absolutely outstanding piece that was just put out by Charles Hugh Smith…

If you talk to young people struggling to make ends meet and raise children, or read articles about retirees who can’t afford to retire, you can’t help but detect the fading scent of prosperity.

…click on the above link to read the rest of the article…

How The Elite Dominate The World – Part 2: 99.9% Of The Global Population Lives In A Country With A Central Bank

October 16, 2017

How The Elite Dominate The World – Part 2: 99.9% Of The Global Population Lives In A Country With A Central Bank

Even though the nations of the world are very deeply divided on almost everything else, somehow virtually all of them have been convinced that central banking is the way to go.  Today, less than 0.1% of the population of the world lives in a country that does not have a central bank.  Do you think that there is any possible way that this is a coincidence?  And it is also not a coincidence that we are now facing the greatest debt bubble in the history of the world.  In Part I of this series, I discussed the fact that total global debt has reached 217 trillion dollars.  Once you understand that central banks are designed to create endless debt, and once you understand that 99.9% of the global population lives in a country that has a central bank, then it finally makes sense why we have accumulated so much debt.  The elite of the world use debt as a tool of enslavement, and central banking has allowed them to literally enslave the entire planet.

Some of you may not be familiar with how a “central bank” differs from a normal bank.  The following definition of a “central bank” comes from Wikipedia…

A central bank, reserve bank, or monetary authority is an institution that manages a state’s currency, money supply, and interest rates. Central banks also usually oversee the commercial banking system of their respective countries. In contrast to a commercial bank, a central bank possesses a monopoly on increasing the monetary base in the state, and usually also prints the national currency,[1] which usually serves as the state’s legal tender.

 

…click on the above link to read the rest of the article…

The Federal Reserve Must Go

May 16, 2017

The Federal Reserve Must Go

If you want to permanently fix America’s economy, there really is no other choice.  Even before Ron Paul’s rallying cry of “End The Fed” shook America during the peak of the Tea Party movement, I was a huge advocate of shutting down the Federal Reserve.  Because no matter how hard we try to patch it up otherwise, the truth is that our debt-based financial system has been fundamentally flawed from the very beginning, and the Federal Reserve is the very heart of that system.  The following is a free preview of an upcoming book that I am working on about how to turn this country is a more positive direction…

*****

As the publisher of The Economic Collapse Blog, there have been times when I have been criticized for focusing too much on our economic problems and not enough on the solutions.  But I believe that in order to be willing to accept the solutions that are necessary, people need to have a full understanding of the true severity of our problems.  It isn’t by accident that we ended up 20 trillion dollars in debt.  In 1913, a bill was rushed through Congress right before Christmas that was based on a plan that had been secretly developed by very powerful Wall Street bankers.  G. Edward Griffin did an amazing job of documenting the development of this plan in his groundbreaking book “The Creature from Jekyll Island: A Second Look at the Federal Reserve”.  At that time, most Americans had no idea what a central bank does or what one would mean for the U.S. economy.  Sadly, even though more than a century has passed since that time, most Americans still do not understand the Federal Reserve.

 

…click on the above link to read the rest of the article…

Paying down the debt is now almost mathematically impossible

December 12, 2014

Paying down the debt is now almost mathematically impossible.

Exactly 199 years ago, in 1815, a “temporary” committee was established in the US Senate called the Committee on Finance and Uniform National Currency.

It was set up to address economic issues and the debt accrued by the US government after the War of 1812.

Of course, because there’s nothing more permanent than a temporary government measure, the committee became a permanent one after just one year.

It soon expanded its role from raising tariffs to having influence over taxation, banking, currency, and appropriations.

In subsequent wars, notably the American Civil War, the Committee was quick to use its powers and introduced the union’s first income tax. They also detached the dollar from gold to help fund the war.

This was all an indication of things to come.

…click on the above link to read the rest of the article…

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