A Cruddy and Dangerous Monetary System

For a long time, I have maintained that America’s cruddy monetary system was headed toward a crack-up. Of course, it’s always impossible to predict the exact timing of such a crack-up, but it’s not difficult to predict that the crack-up will occur at some point in time.

Out-Of-Control Spending and Debt

For a long time now, we have seen out-of-control federal spending on the welfare-warfare state, which far exceeds the federal government’s tax revenues. The difference has been borrowed. The federal government’s debt now exceeds $31 trillion. That sum will be collected from taxpayers assuming that the debt will be repaid. Each taxpayer’s share of the debt is $246,000.

There is no end in sight to this out-of-control spending and debt. Each time the debt ceiling is reached, it is raised. So each year, another $1 trillion or $2 trillion is added to the debt.

Moreover, there is virtually no possibility that any group on the federal dole will permit any reduction in its dole. This is particularly true concerning the three largest programs involving federal largess — Social Security, Medicare, and the national security establishment.

Debauching of America’s Paper Money

Adding to this toxic mix is the decades-long debauching of America’s paper money. Decade after decade, the Federal Reserve has been expanding money and credit and, in the process, reducing the value of everyone’s money.

Whenever the Fed’s monetary debauchery begins manifesting in a big way through soaring prices in the economy, the Fed throws the economy into one of its periodic Federal Reserve-induced recessions, which inevitably throws various sectors of the economy into bankruptcy.

Once the Fed has inflicted a large amount of damage with its recession, it embarks on another round of “easy money,” which begins the cycle again.

Indifference and Antics of the Fed

The main way the Fed induces its recessions is by raising interest rates. That’s what it has been doing in a major way for the past several months.

The assumption has been that the primary victims of the Fed’s actions would be building contractors. The Fed’s attitude toward the housing industry has always been, “Tough luck. That’s the price of living in a free society.” Thus, the Fed couldn’t care less as the housing market started slowing down. It considers that a measure of its success in “fighting inflation.”

This time around, however, it has become clear that the tech industry has also fallen victim to the Fed’s interest-rate antics. But like with the construction industry, the Fed has been indifferent.

Notwithstanding the pain that the Fed’s monetary policies are having on these particular sectors, the Fed recently signaled that it intended to resume its high interest-rate policies owing to soaring prices arising from the Fed’s previous round of “easy money.”

Not so anymore, however. Investment analysts now predict the Fed will either cease or significantly slow its interest-rate hikes.

What happened to bring about this shift? Well, this time, just like in 2008, it turns out that the Fed’s interest rate antics are hurting not just the construction and tech industries but also the banking industry — big time.

Now, it’s one thing when construction firms or tech firms go bankrupt. No big deal. But it’s quite another thing when banks start going under, like what happened over the weekend with Silicon Valley Bank and Signature…

Related Facts:

• The federal government’s debt now exceeds $31 trillion.
• Each taxpayer’s share of the debt is $246,000.
• The Fed’s monetary policies are having immense pain in various sectors of the economy.

Key Takeaway:

America’s cruddy and dangerous monetary system is headed toward a crack-up, and it’s not difficult to predict that the crack-up will occur at some point in time. The federal government’s out-of-control spending and debt, combined with decades-long debauching of America’s paper money and initial indifference to the Fed’s policies toward the industries, makes it clear that we are following a destructive path.

Conclusion:

The monetary system in America is a ticking time bomb, and it’s only a matter of time before it explodes. The federal government’s out-of-control spending and debt, combined with the careless monetary policies of the Federal Reserve, are pushing the country toward the brink of economic disaster. It’s time for a radical change in how things are being done, or we will all be paying the price of this cruddy and dangerous monetary system.