{"id":49842,"date":"2019-11-28T09:02:07","date_gmt":"2019-11-28T14:02:07","guid":{"rendered":"https:\/\/olduvai.ca\/?p=49842"},"modified":"2019-11-28T09:02:12","modified_gmt":"2019-11-28T14:02:12","slug":"peak-irony-fed-paper-admits-fed-policy-can-lead-to-economic-ruin","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=49842","title":{"rendered":"Peak Irony: Fed Paper Admits Fed Policy Can Lead to Economic Ruin"},"content":{"rendered":"\n<h3 class=\"wp-block-heading\"><a href=\"https:\/\/schiffgold.com\/commentaries\/peak-irony-fed-paper-admits-fed-policy-can-lead-to-economic-ruin\/\">Peak Irony: Fed Paper Admits Fed Policy Can Lead to Economic Ruin<\/a><\/h3>\n\n\n\n<figure class=\"wp-block-image\"><a href=\"https:\/\/1mo0o3e03f7c59k045fwasgb-wpengine.netdna-ssl.com\/wp-content\/uploads\/2019\/06\/US_Federal_Reserve_Eccles_Building_1937.jpg\"><img decoding=\"async\" src=\"https:\/\/1mo0o3e03f7c59k045fwasgb-wpengine.netdna-ssl.com\/wp-content\/uploads\/2019\/06\/US_Federal_Reserve_Eccles_Building_1937.jpg\" alt=\"\"\/><\/a><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">A paper&nbsp; by Scott A. Wolla and Kaitlyn Frerking for the Federal Reserve Bank of St. Louis warns that the Fed\u2019s own policy could lead to \u201ceconomic ruin.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The paper titled \u201c<a target=\"_blank\" href=\"https:\/\/research.stlouisfed.org\/publications\/page1-econ\/2019\/11\/01\/making-sense-of-the-national-debt\" rel=\"noreferrer noopener\">Making Sense of National Debt<\/a>\u201d explains the pros and cons of national borrowing in typical Keynesian fashion. In a nutshell, a little debt is a good thing, but too much debt can become a problem.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">But in the process of explaining national debt, Wolla and Frerking stumble into an ugly truth \u2014 Federal Reserve money printing can destroy a country\u2019s economy.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">So, when does the national debt become a problem?<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">According to Wolla and Frerking, debt only becomes an issue when it outpaces GDP, or national income, as they call it. If debt grows at a faster rate than income, eventually the debt might become unsustainable.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">They note that according to the GAO, the&nbsp;<a href=\"https:\/\/schiffgold.com\/key-gold-news\/2019-federal-budget-deficit-was-the-biggest-in-seven-years\/\">US national debt is on an unsustainable path<\/a>.<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\"><p>The federal debt is projected to grow at a faster rate than GDP for the foreseeable future. A significant portion of the growth in projected debt is to fund social programs such as Medicare and Social Security. Using debt held by the public (instead of total public debt), the debt-to-GDP ratio averaged 46 percent from 1946 to 2018 but reached 77 percent by the end of 2018. It is projected to exceed 100 percent within 20 years.\u201d<\/p><\/blockquote>\n\n\n\n<p class=\"wp-block-paragraph\">Note that the total public debt is even higher. Most analysts put the total debt to GDP ratio at around 105%.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">As Wolla and Frerking point out, rising levels of debt elevate the risk of default. Normally, investors holding government bonds bear this risk. While governments never have to entirely pay off debt, there are debt levels that investors might perceive as unsustainable.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u2026click on the above link to read the rest of the article\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Peak Irony: Fed Paper Admits Fed Policy Can Lead to Economic Ruin A paper&nbsp; by Scott A. Wolla and Kaitlyn Frerking for the Federal Reserve Bank of St. Louis warns that the Fed\u2019s own policy could lead to \u201ceconomic ruin.\u201d The paper titled \u201cMaking Sense of National Debt\u201d explains the pros and cons of national [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[195,303,23123,549,21879,27835],"class_list":["post-49842","post","type-post","status-publish","format-standard","hentry","category-economics","tag-debt","tag-fed","tag-michael-maharrey","tag-national-debt","tag-schiff-gold","tag-scott-a-wolla"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/49842","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=49842"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/49842\/revisions"}],"predecessor-version":[{"id":49843,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/49842\/revisions\/49843"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=49842"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=49842"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=49842"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}