Printing Money from Thin Air - How the Fed Reduces Purchasing Power and Makes You Poorer
Unless you have your head in the sand, you’ve probably realized that governments and central banks can print money out of thin air and in unlimited amounts. The United States and the Federal Reserve have been creating money from nothing for years because they had exhausted all their monetary policies. Despite the fact that many Americans will be happy to get a $1,200 check from the Treasury, the move will essentially debase the U.S. dollar, reduce it’s purchasing power, and make every citizen poorer.
Also read: US Real Estate in Jeopardy – Analysts Predict Housing Market Crash to 29-Year Lows The Multi Trillion-Dollar Stimulus Package
The big stimulus package has been approved and the Federal Reserve and the U.S. Treasury have already funneled trillions into the hands of financial incumbents. Further, these entities plan to send direct payments to each American as well. News.Bitcoin.com reported yesterday that a 2 trillion-dollar stimulus plan was in the making and some estimates say the package could end up being upwards of $6 trillion. Essentially, there’s certain criteria Americans have to fit financially and people making $75K or less annually will get a check for $1,200. People with children will also be eligible for $500 per child under the plan. The Great Depression was made great by Hoover and Roosevelt"s attempts to rescue the economy. Politicians could not resist the temptation to "help", even though their programs unnecessarily prolonged and exacerbated the Depression. Today"s #stimulusbill will do far more damage.
— Peter Schiff (@PeterSchiff) March 26, 2020
Unfortunately, people who are excited about this money do not understand how destructive it will be to their purchasing power. All the U.S. government is doing is copying the tactics of currency debasement used by every fallen empire before it, like the Byzantines and Romans. Moreover, a number of central banks worldwide are discussing giving checks to citizens. Financial institutions like the Bank of Canada has also promised to give Canadians $2K per resident. Canada’s biggest banks announced last week that they are offering relief to homeowners by allowing deferred payments on mortgages. However, the Canadian banks plan to just tack the deferred payment onto the back-end of the loans and profit with extra interest. U.S. banks are also planning to profit from people who can’t pay their mortgage loans on time as well by simply racking up the loan’s interest. When central banks buy a security, they pay it with money they create out of thin air.
There is more money in circulation, BUT NOT MORE GOODS AND SERVICES.
That’s how they debase the currency, lower its purchasing power, and make you poorer.https://t.co/JXEzHSvrS2
— Maxime Bernier (@MaximeBernier) March 25, 2020
Central banks have several methods when it comes to tweaking the monetary system like increasing the amount available for loans and removing the deposit requirement banks have to hold to remain solvent. The Fed also issues Treasury bonds so private banks and foreign investors can purchase them but this tends to increase interest rates. So instead of having to pay more money back to the lenders, the Fed buys the Treasury bonds itself in order to drop the rate. When the Fed does this scheme (quantitative easing or QE) with securities, Treasuries, bonds, and equities, the Fed is essentially creating money out of thin air to bolster the economy in the short term. This move, in turn, reduces the value of USD because there is more money than the number of products and services. To-date the U.S. government’s deficit is around $23 trillion and the interest owed plus the trillions more created essentially creates an everlasting debt vacuum.
How the Money Printing Debases Currency, Causes Inflation, and Reduces Your Wealth
Basic economics clearly shows that the increase of any money supply causes inflation and reduces purchasing power. The reason for this is because a spike in demand exceeds supply causing the prices for everything to jump higher. Every fallen empire and every modern government today has always inflated the money supply and the ‘just print more’ attitude has been infectious.
Unfortunately, scholars and economists understand that today’s financial incumbents and U.S. politicians are addicted to selling debt to generations who are not even born yet. The last 30 years of so-called progress in America has stemmed from the revolving debt machine. Back in 2010, a group of well known economists wrote to former Fed Chair Ben Bernanke and told him how dangerous it was to continue the large-scale asset purchases (QE).
“We believe the Federal Reserve’s large-scale asset purchase plan (so-called “quantitative easing”) should be reconsidered and discontinued,” the economists warned. “We do not believe such a plan is necessary or advisable under current circumstances. The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed’s objective of promoting employment.”
Raising Taxes, Austerity Measures and the ‘Biggest Budget Liability’
Politicians think they can cure the disease by just raising taxes on nearly everyone under the sun, but they claim they will take from the rich and corporations. To combat the rising inflation the common solution is higher taxes and increased austerity measures. When people ask why they can’t just print as much money as they want and just remove taxes, the question will not be answered. This is because bureaucrats expect you and future generations to pay for all of the debt with interest. A recent tweet from Coinshares executive, Meltem Demirors, notes how taxation is all part of the plan.
“The U.S. expects to collect close to $4 trillion in taxes in 2021. Over 75% of it comes out of our paychecks – as individual income tax and payroll tax,” Demirors tweeted on Wednesday.
“Now like many people, the U.S. government spends more than it makes,” Demirors added. “Before the recent turmoil, the U.S. government’s 2021 budget was expected to have a $966 billion deficit. Since we’ve been doing this for a while, the total national deficit is $23 trillion. It’s more than the entire GDP of the US in any given year (the sum of everything produced). If you add in unfunded liabilities, the number is closer to $120 trillion. $120T = $798k per taxpayer.” The Coinshares executive added: 35% of the U.S. workforce, boomers, are set to retire in the next decade. They also account for the biggest budget liability – relying on pensions, social security, medicare – money that simply ISN’T THERE.
After understanding that U.S. politicians and all governments simply print money out of thin air, many bitcoiners have opted out of the insane monetary system. This is because crypto advocates understand the importance of not only censorship-resistant money, but also a predictable, mathematical system that cannot be inflated on a whim. Central banks and the Fed like to keep the inflation rate around 2% but after the whole world just created trillions out of thin air that number is going to be much harder to control. BTC’s inflation rate, on the other hand, will be dropping to 1.8% after the halving in May.
What do you think about the Fed creating trillions of dollars out of thin air causing inflation, debasing the USD, and robbing taxpayers? Let us know what you think in the comments section below.
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