The Federal Reserve and U.S. Treasury Department have us on the fast-track to complete disorder in the credit markets and eventual monetary chaos.

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The Money Boom Is Already Here – WSJ

by John Greenwood and Steve H. Hanke

WSJ Feb 21, 2021 — Excerpts:

Speculative manias are in the air, as evidenced by the recent price surges for bitcoin, a digital asset with a fundamental value of zero, and GameStop, a declining retailer. Along with the other economic trends—a strong recovery, surging commodity prices and an uptick in inflation—those asset bubbles have a clear cause: the massive expansion of money and credit.

….. Fast-forward to February 2020. Since then, the quantity of money in the U.S. economy, measured by M2, has increased by an astonishing $4 trillion. That’s a one-year increase of 26%—the largest annual percentage increase since 1943.

The looming danger for the economy isn’t only that the monetary printing presses have been in overdrive since the pandemic began, but also that they are already set for the same in 2021. A monetary surge for this year is locked in.

… March 2020, the Fed’s holdings of Treasurys and mortgage-backed securities have increased by almost $3 trillion. M2 has increased by roughly the same amount.

The second largest source of M2 growth has been commercial bank purchases of short-term Treasurys and other debt securities, including mortgage-backed ones. These transactions create deposits in the same way as new loans do, with the deposit account of the seller or borrower being credited. Since the start of the pandemic last year, the increase in banks’ holdings of these assets has added almost $1 trillion to deposits and, therefore, to M2.

A third source of the increase in M2 was the sudden drawdown of $800 billion in credit lines by U.S. companies from February through April 2020. These funds were immediately credited to corporate deposit accounts. But corporate bank borrowing has turned downward, so that total bank loans have declined from their May peak, leaving a net $300 billion increase.

The $4 trillion increase in M2 tracks closely with the $3 trillion of Fed quantitative easing, plus $1 trillion of bank purchases of securities and the net $300 billion in new corporate borrowing. The reason for the apparent $300 billion discrepancy is that the Fed purchases some of its securities from banks—transactions that do not create new deposits. When the Fed buys securities from a bank, the bank’s reserve account at the Fed is credited. The Fed’s balance sheet has expanded, but for the bank the transaction is merely an asset swap. Its securities holdings drop, and its Fed reserves rise, but there is no addition to customer deposits, so M2 remains unchanged.

The U.S. money explosion isn’t over. Bank reserves, currently $3.2 trillion, will increase by about $1.4 trillion this year simply from Fed purchases of Treasurys and mortgage-backed securities at a promised $120 billion a month. In addition, the Treasury indicated in its February Refunding Statement that it will run down its Treasury General Account at the Fed by about $820 billion this year. This money will be spent through federal fiscal programs. These expenditures will further boost deposits counted in M2.

So we already know that the money supply will likely increase by at least another $2.3 trillion over the current year. In other words, even without any new lending or further purchases of securities by banks, the M2 money supply will grow by nearly 12% this year. That’s twice as fast as its average growth rate from 2000-19. It’s a rate that spells trouble—inflation trouble.

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The Leviticus 25 Plan has the raw power to clean this wreckage up.

It all starts with massive debt elimination at ‘ground level’ and a wide-ranging reduction in dependence on government.social welfare and income security programs, and dynamic adjustments in entitlement spending.

The resulting government outlay reductions and expansive tax revenue growth will generate $383 billion government surpluses for each of the first five years of activation (2022-2026), as well as powerful budget balancing effects for state and local government entities.

“He who will not apply new remedies must expect new evils.” – Sir Francis Bacon

The Leviticus 25 Plan is a dynamic economic initiative providing direct liquidity benefits for American families, while at the same time scaling back the role of government in managing and controlling the affairs of citizens.  It is a comprehensive plan with long-term economic and social benefits for citizens and government.

The inspiration for this plan is based upon Biblical principles set forth in the Book of Leviticus, principles tendering direct economic liberties to the people.

The Leviticus 25 Plan – An Economic Acceleration Plan for America

$90,000 per U.S. citizen – Leviticus 25 Plan 2022 (3682 downloads)

The U.S. Government and Federal Reserve, through their ongoing, ineffectual ‘give away’ programs have fully engaged themselves in the ‘bastardization of money.’

They have put the U.S. on an autopilot glide path toward a crushing currency debasement, long-term economic turmoil, and financial insecurity for millions of American families.

U.S. Government and Federal Reserve stimulus plans do nothing to eliminate public and private debt, reduce dependence on government, or build the foundation for long-term economic growth and prosperity in America.

Here is the latest plan working its way through Congress:

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House Panel Advances Stimulus: Approves $1,400 Payments, Personal Tax Credits, Loans For Insolvent Pensions

ZeroHedge, Feb 11, 2021 – Excerpt:

On Thursday we noted that the biggest winners from the upcoming $1.9 trillion stimulus would be a family of four making up to $150,000 per year, which would entitle them to $12,800 in federal income support over the next 15 months.

Part of this is of course the $1,400 (not $2,000) in direct payments – which just cleared a key hurdle on Thursday when the House Ways and Means Committee passed legislation which also included tax credits for children that will be sent to households on a monthly basis, according to Bloomberg.

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These types of ongoing U.S. Government and Federal Reserve ‘give away’ programs are worse than mere ‘folly,’ they are ‘dangerous’ to the sacred ideals of freedom and liberty upon which our nation was founded.

The Leviticus 25 Plan is America’s freedom plan – eliminating massive public / private debt overhangs, reducing dependence on government, revitalizing a citizen-centered health care system, and restoring economic liberty for all Americans.

The Leviticus 25 Plan 2022 has the raw power to get American families out of debt, and generate $383 billion federal budget surpluses each year in its first five years of activation (2022-2026), and it pays for itself over the 10-15 year period following activation.

The Leviticus 25 Plan is a dynamic economic initiative providing direct liquidity benefits for American families, while at the same time scaling back the role of government in managing and controlling the affairs of citizens.  It is a comprehensive plan with long-term economic and social benefits for citizens and government.

The inspiration for this plan is based upon Biblical principles set forth in the Book of Leviticus, principles tendering direct economic liberties to the people.

The Leviticus 25 Plan – An Economic Acceleration Plan for America

$90,000 per U.S citizen – Leviticus 25 Plan 2022 (3680 downloads)

ZeroHedge: Lebowitz: The Fed’s Ever-Growing Golden Footprint

Authored by Michael Lebowitz via RealInvestmentAdvice.com,

Excerpt:

What is a Dollar?

The value of a dollar is a figment of your imagination. A “greenback” is a worthless piece of paper backed by an intangible promise- the “full faith and credit” of the U.S. government. Its value rests on a necessary belief that one can transact with it today and tomorrow. Therein lies the value of any fiat currency.

Similarly, gold has little tangible value other than what we ascribe to it. Gold is not currently an authorized currency in any developed nation. But, it is held in proportionally small amounts by many governments as an informal reserve. Besides opinions of worth, the difference between the dollar and gold is gold has provided a means of storing wealth and transacting for millennia. Gold is and has always been the antithesis of fiat currency. There are important differences, such as elasticity, storage, and transact-ability that we will not review in this article.

Decades of irresponsible fiscal spending and monetary tomfoolery slowly but surely reduce the dollar’s value. The loss of its value is not perceptible to most as a dollar is still worth a dollar. For those on the lookout, however, the price of gold is sending a strong message.

Trust in the Dollar

The U.S. dollar is the world’s most trusted currency. Even America’s most ardent enemies transact in dollars and hold them as reserves.

For the last 30 years, the U.S. government has run continual deficits requiring ever greater assistance from the Fed to fund it. The Fed works their magic by adjusting the nation’s money supply to manage interest rates and keep interest expenses manageable.

For many years, as shown below, the monetary base was approximately 5% of the nation’s annual economic output. Starting in 2008, however, the Fed took much bolder steps to push interest rates lower. Their actions ensured the government could sustain recurring outsized deficits. Equally important, corporate and private borrowers can service mounting debt levels.

With short-term rates lowered to zero in 2008 and traditional monetary tools not affecting longer-term rates, the Fed introduced QE. QE requires large amounts of Fed purchases of notes and bonds to put downward pressure on the entire yield curve.

Successive rounds of QE occurred well past the end of the financial crisis and are happening again on a grander scale today. The Fed’s goal is to allow the government and other debt holders to fund at low-interest rates. Essentially they need to flood the system with money to make money cheap.

Real Interest Rates

In a free market, the price of a good or service should be commensurate with the supply and demand of the good or service.

When the money supply is manipulated, prices stray from what supply and demand curves say the price should be.

A current example is U.S. Treasury yields or the price of money. Rational lenders/investors should always demand a positive yield accounting for inflation and risk. If not, they lose purchasing power and are better off not lending. Accordingly, the yield on Treasury debt should always equal future inflation expectations plus a risk premium.

The current yield on the 5-year Treasury note is 0.45%. 5-year inflation expectations are currently 2.18%. Even if we assume zero risks, the yield is at least 2.17% below what any rational investor should demand. The -2.17% difference between the nominal rate and inflation rate is called the real rate.

The level of real interest rates is a sturdy gauge of the weight of Federal Reserve policy. If the Fed is treading lightly and not distorting markets, real rates should be positive. The more the Fed manipulates markets from their natural rates, the more negative real rates become.

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The U.S. government and the Federal Reserve have us on a ‘radar-locked’ Dollar erosion glidepath – that will most certainly accelerate over the next 5 years.

America’s debt load, public and private, will continue to mushroom higher, leading to additional borrowing and ‘monetizing’… and U.S. citizens and their families will get financially whip-lashed in the process.

There is one plan with the raw power to solve this financial ‘death trap’ through massive debt elimination, Dollar stability, the restoration of free market dynamics, long-term economic growth, and financial security for American families.

The Leviticus 25 Plan will generate significant budget surpluses over the initial 5 years of activation, and will pay for itself over the next 10-15 years.

The Leviticus 25 Plan is a dynamic economic initiative providing direct liquidity benefits for American families, while at the same time scaling back the role of government in managing and controlling the affairs of citizens.  It is a comprehensive plan with long-term economic and social benefits for citizens and government.

The inspiration for this plan is based upon Biblical principles set forth in the Book of Leviticus, principles tendering direct economic liberties to the people.

The Leviticus 25 Plan – An Economic Acceleration Plan for America

$90,000 per U.S. citizen – Leviticus 25 Plan 2021 (3937 downloads)