* In a story by Plato, students learn to use persuasive arguments even if they are not true. Today, we have whole industries and government full of these sophists: lawyers, economists, politicians (Democrats or Republicans), economists, et al.
- There is no such thing as new truths; error might be old or new, but truth is as old as the universe.
- Frederick Douglas
Today, the Federal Reserve will make an important decision on whether to continue to hike interest rates to fight inflation, pause or declare victory. We, at Evolution, believe another hike is coming. The real story is why are we in this continual raise or lower our price of money? The better question is why do we continue to let this cabal control over our money and economy? The only remedy that they employ after their policies cause havoc is to inflate the crisis by rolling over the debt with new debt.
Constitution...
...remember that it expressly declares that Congress will make this decision. Even after the Federal Reserve was established, their committee favored a one and done approach. The rate would be set for a year and reevaluated the following year. Generally, they kept the same rate year after year. In those days, the stable action on the price of money allowed Congress to actually have a budget. It allowed industry to plan ahead, research and develop. So, what happened?
Fiat Spending...
This allowed politicians and political parties to promise "goodies," get campaign contributions and buy votes. They make the sophists proud. One thing leads to another. Greed took control of capitalism. There was never a love of owners for workers, so outsourcing jobs has no conscience for the captains of industry. Then, we entered the world stage by getting into two wars. Fiat spending allowed the government to run deficits to finance both campaigns. Then, egos got in the way. We went from a peaceful, neutral nation to the police force of the world. Fiat allows this reckless policy.
So, you ask, "How does the Fed connect to this?"
The Federal Reserve buys the government debt. The selling of bonds by the US Treasury is just a rubber stamp procedure. The real dangers are the poor decisions on foreign policy. The reckless use of the dollar as the world's reserve currency. The excessive influence of the military in our government. They spend like the dollar comes from a genie bottle. All these and other aspects of spending are provided by the Federal Reserve and fiat money. The reason that they desire fiat money is because it uses debt. This is why the Founders chose gold. You cannot spend more than you have. Anyway, the title of this piece refers to our recent Fed leadership. We start with...
Ben Bernache (2006-2014)
When the financial crisis began, he said nothing. He hoped it would go away. The Fed's policy of low rates and less regulations gave the real estate industry an invitation to greed. Then, he took action in 2007. He stated, "Everything is under control." The country almost collapsed in 2008.
We will say this, in his younger years, he did profess two smart observations. One, bank failures propagate downturns and are not a side effect of them. The other is monetary policy by the Fed was the cause of the Great Depression. By the way, our economy is presently suffering bank failures. In addition, it is nothing new for Fed chairpersons to demonstrate intelligent thinking in their younger years. Remember, Alan Greenspan? He once wrote the best essay on gold and why gold makes the best currency. Then, he became the Fed leader. He played interest rates up and down like notes on a scale. He steered our economy up and down. The rich got richer and the poor get poorer. The middle-class began to shrink.
Janet Yellen (2014-2018)
She kept rates low. She got out before the damage became apparent. She kept the printing press humming and bought all the debt the government could provide. Now, she is the Secretary of the Treasury. She sells bonds to keep inflation hidden. Her problem is the global community fears all our debt and continual reckless spending. However, we will only point out this one quote from her, "No recession!" Now, we at Evolution, know that our call is correct. She also says that inflation can come down without unemployment rising. Sorry, we couldn't stop ourselves. The rich got richer and the poor get poorer. The middle-class is disappearing.
Jerome Powell (2018 -present)
He kept rates low, but the damage was building for inflation to break out. It did. He, like Bernanke, hoped it would go away. It didn't. He said, "It is transitory." He was wrong. He never admits the Fed's policy causes inflation. He likes to point to Congress for spending, but if the Fed did not buy, Congress could not spend. The rich continue to get richer and the poor as a class are growing, with competition from those at poverty levels. The middle-class is so small that it is getting harder to be classified as a segment of society. In the majority of regions in our nation, the middle-class cannot afford home ownership.
We stand by our call that we are in a "stealth recession." The reason is inflation is greater than our growth either as a nation or individually. This is stagflation and we are in it. Now, you should ask why do we allow our nation to keep this terrible agency in existence? Join our meme, "End the Fed!" Peace.
