Weeping and gnashing of teeth shall come…
We don’t know when, exactly. But we do know a certain catastrophe’s approaching. In fact, we can see it on the horizon.
Does anyone in Washington give a rip the nation’s beyond broke? Does anyone in Congress care that outright money printing is what’s financing their stimulus bills? Does House Financial Services Committee Chair Maxine Waters think it’s all a real hoot?
Surely, someone in the legislature is aghast at federal spending that’s gone completely out of control.
Are you aghast?
We are. But there’s nothing we can do to stop it. Nearly all remnants of fiscal conservatism have been quarantined from federal government.
The majority of the electorate have voted for generous gifts from the public treasury. They want free education, free food, free phones, free transportation, and free drugs. They want debt forgiveness. Most of all, they want free money.
Many representatives are pushing the President to give the voters what they want…and what the politicians have promised. Specifically, more stimmy checks. According to MoneyWise:
“More than 75 members of Congress say that until the pandemic is over, there should be regular stimulus checks. President Joe Biden is being urged to wrap them into the $2.3 trillion infrastructure spending plan he’s now promoting.”
Stimmy checks, as far as we can tell, have nothing to do with infrastructure. Yet that’s the beauty of perpetual stimmy checks in the interminable pandemic era. The legislature can “wrap them into” just about anything. All it takes is a simple stimmy check earmark.
Hemorrhaging Red Ink
The longer personal livelihoods are funded by government giveaways the more dependent people become. Those who were once self-supporting through their own work derived income are now reliant on stimulus…and generous unemployment checks.
Why work, when it’s much more lucrative to loaf and invite your soul?
Meanwhile, Washington’s hemorrhaging red ink. This week the U.S. Treasury Department released its Monthly Treasury Statement.
It’s unlikely Treasury Secretary Janet Yellen read it. But if she had she would’ve discovered the federal government has already racked up a $1.7 trillion budget deficit in fiscal year 2021.
The fiscal year extends through the end of September. The running budget deficit reported this week was through March – the halfway point. At this rate, we’re looking at a $3.4 trillion deficit for fiscal year 2021. This even tops the $3.1 trillion record deficit attained in fiscal year 2020.
The federal government ran a budget deficit of nearly $660 billion in March alone. In 2017 – just four years ago – the annual deficit was $666 billion. At the time, this was considered reckless and insane.
Now the federal government goes in the hole by $660 billion in one month and no one bats an eye. What’s more, Congress demands further spending, bigger deficits, stimmy check earmarks, and uncompromising fiscal insanity.
Where’s the money coming from?
By now anyone who’s bothered to ask is clued into where the money comes from. And from where it comes is flagrant deception…
The Ugly Truth About Printing Press Money
The Federal Reserve adds a notation to its balance sheet – now over $7.7 trillion – and the credit magically appears from thin air. The Fed then loans the freshly minted credit to the Treasury through the purchase of Treasury notes. The Treasury then directs this printing press money into Washington’s various spending programs.
This inflation of the money supply is inflation in the truest sense. And it comes with destructive consequences.
John Maynard Keynes, Fabian socialist and the godfather of modern day economic planning, in his 1919 work, The Economic Consequences of the Peace, wrote:
“By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security but [also] at confidence in the equity of the existing distribution of wealth.
“[…]. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.”
Could this continuing process of inflation explain the extreme divergence between today’s freshly minted bitcoin millionaires and the abundance of Hoovervilles in cities across the country?
Could it explain the extreme divergence in net worth between the average Congressional representative and the average plumber?
What about the extreme divergence between house prices and incomes…or the extreme divergence between market capitalization and gross domestic product?
The Dow Jones Industrial Average just eclipsed 34,000 – is this some kind of joke?
After asset price inflation and wild gambling and speculation comes consumer price inflation…the real wealth destroyer.
This is the ugly truth about printing press money. The ugly truth Fed Chair Powell and Treasury Secretary Yellen will never share as they champion the virtues of their policies of mass inflation.
Weeping and gnashing of teeth shall come.