The greatest financial fraud in history is now inflicted on the American people and others in the form of inflation.
Do you find it strange that banks and other financial institutions are giving mortgages to millions of people at an interest rate of around 3% for 30 years, while the government reports that inflation is above 6% in annual rate and rising? Are you frustrated with being a responsible and prudent person saving for a ‘rainy day’ or retirement, and your savings account only pays about 1% interest, while inflation is several times higher? ? Do you find it strange that the government official most responsible for inflation – Treasury Secretary and former Fed Chairman Janet Yellen – told us several months ago that inflation would be moderate and transient, which doesn’t turned out to be correct? Do you think she might not know what she is doing, especially when she says record government spending will lower inflation?
Do you find it strange that Energy Secretary Jennifer Granholm only laughs when reporters ask how pipeline closures and abandonments and significant increases in regulation of oil producers have raised gas prices? and oil? Do you think it’s strange that Transportation Secretary Pete Buttigieg is taking two-month ‘paternity’ leave during the country’s biggest supply chain crisis and offering no meaningful solutions, when several dozen ships waiting to be unloaded? Do you think it’s strange that President Joe Biden has appointed a woman as Comptroller of the Currency, who wants to officially nationalize the banks and wants to shut down the oil and gas industry before economical energy substitutes are developed?
Looking at interviews with many government officials, one wonders if it is really possible that they are so stupid. Or do they have a different agenda?
It’s no secret that many in government like to spend other people’s money. Their ability to spend is limited by their inability to extract more tax revenue or by borrowing. At some point, people reduce the amount of work and savings they are willing to tax – often by refusing to work (at least in the legal economy) or to save more. In view of this universal fact, governments resort to borrowing. As those who make loans to the government (most often by purchasing government bonds) are more concerned with the ability or willingness of any government (federal, state or local, etc.) to repay debt and interest , they demand higher returns to offset the risk. This, again, puts a natural limit on the amount of borrowing a government can make.
But what if members of government find a way to make the loans they get from private parties appear to be “risk-free” or, better yet, find ways to subsidize them? This is now done on a large scale – the side effects are inflation – which reduces the real incomes of workers and savers. Inflation is an unregulated tax, especially on low-income people, causing a massive transfer of wealth from the poor to those who are rich or “have”. The beneficiaries are often politically well connected people, such as leaders of unions and other interest groups, government bureaucrats, crony capitalists, etc.
To prevent the government from printing money to cover its expenses, which everyone believes will create inflation, the Federal Reserve (America’s central bank) is subject to several restrictions. For example, it is not allowed to buy government debt directly from the Treasury. So he does an indirect workaround. Until 2010, the Fed’s banks had never held more than a trillion in federal government debt – that number now stands at nearly six trillion and continues to grow. Several years ago, prominent monetary experts, such as former Federal Reserve Chairman of Cleveland Bank Jerry Jordan and current World Bank Chairman David Malpass, warned that the Fed was losing traditional means of control. inflation. They and others in the know believe that we are now near or even beyond this point.
Banks and the like are willing to lend large sums of money to politically privileged clients (home buyers and many large corporations) because they are lending other people’s money, including the taxpayer, rather than the taxpayer. their. At the same time, many small businesses, and those in the oil and gas sector, arms dealers, etc. are struggling to get loans because the Biden administration has signaled that institutions that make such loans will be scrutinized. by financial regulators.
We are rapidly moving towards a system where the government allocates capital (as is done in socialist and communist states) rather than the market. The result will be a misallocation of money and the theft of loans from friends and political allies, which will lead to lower growth, lower incomes, and a significant loss of freedom.
As inflation accelerates and economic restrictions such as â€œprice controlsâ€ multiply, people increasingly acquire and use private money that is difficult to regulate – surrogate alternatives, such as Bitcoin and other cryptocurrencies, including those with real support. This future is upon us!
â€¢ Richard W. Rahn is president of the Institute for Global Economic Growth and MCon LLC.