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“Blue line generates income to pay interest on red line. See the problem? It’s just math.” Financial Advisor Lawrence Lepard

A prudent man foreseeth the evil, and hideth himself: but the simple pass on, and are punished.

  • Proverbs 22:3

Last week saw the second-largest banking collapse in American history with the implosion of Silicon Valley Bank (SVB).  The failure of SVB followed closely on the heels of another bank failure, Silvergate Bank.  As of this writing, there are rumors of more bank failures to come.

Do these bank failures and rumored bank failures signal an imminent collapse of the financial system?  I don’t know.  I’ve learned to be careful about predicting such things.  The Wall Street/Washington/Central Banker establishment has thus far shown itself both dedicated to and capable of kicking the can down the road to a degree that many financial observers, myself included, did not think possible. 

In my opinion, these bank failures and possible future bank failures stem from the 2008 financial crisis, which itself was never properly dealt with.  The problems in the financial system that cause the Great Recession were never faced squarely and were only papered over with the “untampered mortar” of money printing, bailouts, and accounts tricks.  Instead of dealing with our problems honestly, we tried to cheat our way out of the financial crisis.  So it should come as no surprise that it appears to be coming back. 

So what is a Christian to make of all this?  How are we to respond?  The Bible has a lot to say about ideas such as prudence, wisdom, and discernment.  These traits were highly prized at the time of the Reformation and in the following centuries by the heirs of the Reformation. 

Those with a financial or business background may be familiar with the prudent man rule.  According to one definition I found, the prudent man rule is, “a rule giving discretion to a fiduciary and especially a trustee to manage another’s affairs and invest another’s money with such skill and care as a person of ordinary prudence and intelligence would use in managing his or her own affairs or investments.”  According to this, not only are fiduciaries to manage the financial affairs of others in a prudent fashion but the notion of prudence is also tied to how they would manage their own affairs.  That is, the prudent man standard encompasses the golden rule, whereby we are to treat others as we ourselves would like to be treated. 

Prudence in financial and other matters served our Protestant forebears well, as it enabled them to build the greatest civilization in history.  But as Christianity faded from the scene in America and other nations formerly under the influence of the Reformation, a new ethic took hold.  No longer did prudence govern the thinking of men, but a sense of entitlement and instant gratification.

John Maynard Keynes, the most influential economist in the past 100 years, hated the Christian ethic of financial prudence demonstrated in the 19th century and railed against it.  In his 1920 book The Economic Consequences of the Peace, Keynes wrote,

And on the other hand the capitalist classes were allowed to all the best part of the cake theirs and were theoretically free to consume it, on the tacit underlying condition that they consumed very little of it in practice.  The duty of ‘saving’ became nine-tenths of virtue and the growth of the cake the object of true religion.  There grew round the non-consumption of the cake all those instincts of puritanism [n.b. the Puritans are universally despised by unbelievers such as Keynes] which in other ages has withdrawn itself from the world and has neglected the arts of production as well as those of enjoyment.  And so the cake increased; but to what end was not clearly contemplated.  Individuals would be exhorted not so much to abstain as to defer, and to cultivate the pleasures of security and anticipation.  Saving was for old age or for your children; but this was only in theory, – the virtue of the cake was that it was never to be consumed, neither by you nor by your children after you.

Keynes, The Economic Consequences of the Peace, pp. 19-20.

With a mindset like this, it should come as no surprise that Keynes was an apostle of deficit spending and government debt, both of which he mistakenly saw as necessary for ending the 1930s Great Depression, which itself was caused and prolonged by the interventions of central bankers and governments.  Asking central bankers and politicians to fix a depression or a banking crisis is like inviting an arsonist to put out your house fire.   

How widespread is the influence of Keynesian economics?  A famous 1971 quote from then-President Richard Nixon is a clue.  “We are all Keynesians now,” said the President.  It was true then, and it remains true today.  All, or nearly all, economists working in academia, on Wall Street, in corporate America, and in Washington are Keynesians of some sort or another.  The baleful influence of Keynesian economic thought is substantially responsible for the sorry economic predicament of America and other western nations.  What is Keynesian economics?  Without delving into a lot of technical details, it’s the idea that you can deficit spend yourself rich.  The “puritanical” prudence demonstrated in more Christian centuries said that hard work, savings, and investment were how you built wealth and financial security in the long run.  But Keynes famously said, “In the long run we are all dead.”  Various apologists for Keynes have tried to rehabilitate this statement by arguing that Keynes really wasn’t saying he had no regard for the future.  But when you consider Keynes’s “in the long run we are all dead” comment in the context of his other statements such as the extended quote above, it seems entirely fair to see it as a Keynes’s dismissing the future for gratification in the now.

So back to our earlier question, how is a Christian to respond to the ongoing financial crisis?  Proverbs 22:3 quoted at the top of this post provides good guidance.   Notice that the prudent man does two things, he foresees trouble coming and then hides himself. 

The first thing you and I need to do is to recognize that there is trouble coming.  Many people, even many Christian people, do not realize the serious economic danger America and other western nations are in.  The United States is over $30 trillion in debt.  And that’s just federal debt.  It doesn’t include state, municipal, corporate, or individual debt.  And the debt keeps growing.  In fact, given that our financial system is based on debt, the debt must keep growing to sustain the system.  Obviously, debt cannot expand infinitely and forever.  God has so constructed the universe that all debts must be paid.  Just look at the chart at the top of this post. Do you think debt can continue to grow faster than income? If not, the current financial system must come to an end.  It’s a matter of when, not if, we have a system-down event.  The timing of the collapse is uncertain.  But in my opinion, it’s probably sooner rather than later.

Second, as Christians, we must hide ourselves.  What does this mean in the context of a financial crisis?  A lot of those old-fashioned “puritanical” ideas, the sorts of things that Keynes and others of his ilk hated and made war on a century ago, are a good place to start.  Eliminating debt and building savings is wise counsel.  And when I say savings, I mean at least some of that savings should be held outside the financial system.  That means having some ready physical cash at home.  It also means holding some savings in dollar alternatives.  The best dollar alternatives are physical gold and silver, but there are other options as well.    

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Federal Reserve Board Chairman Jerome Powell faces reporters at a press conference in Washington, DC., on June 15, 2022. REUTERS/Elizabeth Frantz

A prudent man foresees evil and hides himself, but the simple pass on and are punished.

  • Proverbs 22:3

For most of us, few things are more boring than central banks and monetary policy.  Those who run our monetary system know this and are more than happy to make sure this situation persists, for it very much works to their advantage.

Take, for example, Friday’s announcement of a digital dollar by Jay Powell, the Chairman of the Federal Reserve Jay Powell.  According to Powell, a U.S. digital dollar, “could…potentially help maintain the dollar’s international standing.”

All this sounds innocent enough.  Even downright boring.  But there’s a lot going on here that is far more profound than a quick glance may suggest, and it’s worth taking a little time to unpack it. In short, Powell is proposing a new form of the US dollar he’s calling, “A U.S. CBDC (central bank digital currency). 

So, who is Jay Powell?  As mentioned earlier, he’s the Chairman of the Federal Reserve, the central bank of the United States.  This is an extraordinarily powerful position.  Some people argue that it’s the second most powerful position in America, following only that of the President. 

The Chairman of the Federal Reserve heads up an institution that essentially runs the entire US financial system via its control over the US dollar.  Set up in 1913, the Federal Reserve System is in charge of the issuance of the dollar, controlling how many dollars – i.e. currency units – are in existence.  And since the US dollar is not merely the currency of the United States, but functions as the world’s reserve currency, one could argue that the Federal Reserve System (hereafter “the Fed”), though its ability to issue dollars, oversees the financial system of the entire world. 

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An employee holds a 1-kilogram gold bar in the precious metals vault at Pro Aurum KG in Munich, Germany, on July 22. Andreas Gebert / Bloomberg via Getty Images

A prudent man foresees evil and hides himself, but the simple pass on and are punished.

  • Proverbs 22:3

July 27, 2020 was a historic day for those who follow precious metals.  For it was on that day that gold surpassed its old all-time high in U.S. dollars – the old all-time high being $1,921 – to close at $1,965. 

That was just thirteen days ago. 

Since that time, gold has closed as high as $2,069 and now sits at $2,042, its closing price on Friday, August 7. 

To put that in some perspective, once year ago gold closed at $1,495.  That was on Friday, August 9, 2019. 

Put another way, gold is up over 36% in U.S. dollars in the space of a year.  That’s a raging bull market in anyone’s book.  Yet, oddly, the mainstream financial press has had relatively little to say about it.     

But what about silver?  Glad you asked!

After lagging gold for the past 14 months, silver has recently show signs of life.  Unlike gold, silver has not yet punched through its old all-time high of $50 set back in 1980, or even its more recent near all-time high of $47 set back in 2011.

Nevertheless, silver has been on a nice run recently and is up over $10 an ounce in the past two months.  As of Friday’s close, silver sits at $28.41. 

But the purpose of this post is not to throw a lot a boring numbers at you.  No.  The purpose of this post is to help you understand what these numbers really mean for you.

In short, this is a return to one of the major themes of this blog over the past two years.  It is a warning to take cover.  Tough times are coming. 

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Jerome Powell, Federal Reserve Chairman.

“We print it [money] digitally.  So as a central bank, we have the ability to create money digitally. And we do that by buying Treasury Bills or bonds or other government securities.  And that actually increases the money supply.”

I probably shouldn’t be, but I often am, amazed an God’s providential timing in providing illustrations of points I plan to talk about.  As I’ve been thinking about this series of posts, I planned this week to write about the Fed and the process of money, more properly currency, creation. 

In one respect, the process the Fed uses to bring currency into being is fairly easy to grasp.  On the other hand, it is so obviously fraudulent that it shocks people when they hear about it. “That simply can’t be.” is, I think, a fairly common reaction. 

In the Lord’s providence, and quite apart from any planning by me, it so happened that Jerome Powell, the Chairman of the Federal Reserve, was interviewed on 60 Minutes last Sunday by correspondent Scott Pelley of CBS News.  You can watch the full interview and ready the transcript here.  In my opinion, Pelley did a good job asking important questions of Powell, especially concerning the process by which the Fed prints money.  At one point, Pelley asked Powell about the Fed’s response to the coronavirus (CV) crisis, and Powell ticked off a list of the Fed’s market interventions.  Here’s what was said next,

PELLEY: Fair to say you simply flooded the system with money?

POWELL: Yes. We did. That’s another way to think about it. We did.

PELLEY: Where does it come from? Do you just print it?

POWELL: We print it digitally. So as a central bank, we have the ability to create money digitally. And we do that by buying Treasury Bills or bonds or other government guaranteed securities. And that actually increases the money supply. We also print actual currency and we distribute that through the Federal Reserve banks.

There you have it.  The Fed chairman admitting on national television that the Fed creates money and uses it to buy, “Treasury Bills or bonds or other government guaranteed securities.”  He also noted that this activity, “actually increases the money supply.” 

What I would like to do in today’s post is to examine these statements – Powell’s saying that the Fed “creates money” and that this act “actually increases the money supply” – in greater detail.  Just how does the Fed create money and what are the effects of “increasing the money supply” on our daily lives? 

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The_Phillip_Medhurst_Picture_Torah_122._Abraham_purchasing_Ephron._Genesis_cap_22_v_16._Hoet (2)
Abraham purchasing the cave of Machpelah from Ephron by Phillip Medhurst. Courtesy of Wikimedia Commons.

Abraham weighed out the silver for Ephron which he had named in the hearing of the sons of Heth, four hundred shekels of silver, currency of the merchants.

  • Genesis 23:16

In his lecture “Money, Freedom and the Bible,” John Robbins argued that the manufacturing of money was not a proper function of government, because there is no warrant for this in Scripture.  The Bible charges the civil magistrate with the duty to punish evildoers and reward the good.  There is no mention of anywhere in Scripture of God granting civil governments the right to manufacture money.

The first time I heard this many years ago, I was shocked by this idea.  “But all governments manufacture money,” I thought to myself.  “If the government didn’t supply money, who would?” I continued.

Of course, my initial objection can be answered by pointing out that simply because a thing is done does not logically imply that it ought to be done.  In the 18th century, David Hume famously made this point.

Secondly, concerning who would supply money in the absence of governments, the answer to this is the market would take care of this.  As Robbins noted in his lecture, there is such an example of this in Genesis 23, where Abraham pays for the field to bury Sarah by weighing 400 shekels of silver, “currency of the merchant.”  Note that it was not the currency of Pharaoh, nor the currency of the King of the Hittites that Abraham weighed out.  It was the currency of the merchants.  That is to say, it was a unit of money that arose from the common practice of the free market.  Importantly, it was not a government issued currency, neither was it the product of a government licensed central bank.

For that reason, that it arose in the marketplace and was privately managed by the merchants who used it, the shekel weighed out by Abraham was an honest unit of money.  The same cannot be said for sovereign currencies of our day.  Not only do they fail to maintain purchasing power, but they are deliberately designed to lose value over time.  To this author’s knowledge, there is not one honest currency in use today, including, and perhaps especially, the U.S. Dollar.

Last week’s post titled “This is Going to Hurt, Part 1: Honestly Facing our National Bankruptcy,” discussed the disastrous economic numbers coming out as a result of the government’s response to the coronavirus pandemic.  Please note, I did not write, “the disastrous economic numbers coming out as a result of the coronavirus pandemic,” but, “the disastrous economic numbers coming out as a result of the government’s response to the coronavirus pandemic.” It is not the Chinese coronavirus that caused over 30 million Americans to lose their jobs in the past six weeks, it is decision, more accurately decisions, of various government officials that have led to this disaster.

But oddly, as I also noted, the stock market has rebounded even as economic activity has made record declines.  How can this be?  The short answer to this question is money printing on a mind-blowing scale by the U.S. Federal Reserve, the central bank of the United States.

My purpose in this post is to lay out in non-technical language what a central bank is and what it does.  In subsequent posts, I shall illustrate the unbiblical, immoral nature of central banking by looking in detail at the origin, the workings and the disastrous effects Federal Reserve (the Fed) policy has had on our nation.

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Mnuchin.Unemployment
U.S. Treasury Secretary Steve Mnuchin warns that unemployment could reach 25%, a level equal to that of the Great Depression.  But according to economist John Williams, not only are we already at 25% unemployment, we’re well  past it.

Assuredly, I say to you, you will by no means get out of there till you have paid the last penny.

  • Matthew 5:26

“Trump administration is ‘willing to spend whatever it takes’ to mitigate coronavirus crisis says Steven Mnuchin as he continue to facilitate bipartisan negotiations – but admits unemployment could hit 25%.”

That somewhat longish headline leads a story from today, May 10, 2020, in the Daily Mail.  A few things are worth noting here.  First, the current economic crisis is called, inaccurately, the “coronavirus crisis.”  The massive unemployment and terrifying declines in industrial production that have hit the U.S. and other Western nations has not been caused by the coronavirus.  It is the government’s response to the coronavirus that is the immediate cause of the 20 + million private sector jobs lost in month of April.  To put that number is some perspective, the previous record monthly job loss number was 800,000 + which occurred during the height of the 2008 financial crisis in March 2009.  The virus did not shut down the economy and cause record job losses; the politicians and bureaucrats did.  By calling it the “coronavirus crisis,” politicians are attempting to shift the blame from themselves to a virus.

Second, the negotiations in which U.S. Treasury Secretary Steve Mnuchin is immersed involved more money printing by the Federal Reserve and more deficit spending by Congress.  The truth, that Fed money printing and prodigal spending by Congress are the root cause of our current economic crisis, is nowhere to be seen.  Treasury Secretary Mnuchin wants you to believe that the cure for our financial woes us is doing more of the same things that put us in this mess in the first place.

Third, note well that Steve Mnuchin is facilitating “bipartisan negotiations.” As a lifelong Republican – I’m from the Tea Party/Ron Paul wing of the Republican party, not the mainstream, but nevertheless I am a Republican – I hate to admit that the my own party is in part responsible for the incompetent and immoral response to the coronavirus, a response that has included doling out literally trillions of dollars, dollars all which had to be borrowed into existence by the combined efforts of Congress and the Fed.  I would like to blame all of this on the Democrats, but that simply would not be honest.  It is Democrats and Republicans conspiring together to spend money we don’t have in ways that were never authorized by the Constitution.  With a few exceptions, nary a peep of protest is heard from either party concerning the shockingly large spending programs already put in place, programs which Rep. Thomas Massie (R-KY) called, “the largest wealth transfer in history.”  And now Congress is colluding with the Trump administration on even more deficit spending.

Fourth, Steve Mnuchin admits that unemployment could hit 25%.  Here’s some news for Mr. Mnuchin, most likely unemployment is already well north of that figure.  Actually, it’s probably not news to him at all.  One suspects he already knows this.  What a lot of people don’t know is that the government changed the way it calculates unemployment.  In 1994, the Bureau of Labor Statistics (BLS) stopped counting long-term discouraged workers – a long term discouraged worker is someone who has not attempted to find work in the last four weeks – as unemployed.  Previous to that, such persons were included in the unemployment calculations released by the BLS.  John Williams is an economist who runs his own website called Shadow Stats.  Among the services he provides is a monthly calculation of the unemployment rate using the government’s old method.  Want to take a guess at where he puts current unemployment?  Try 35%!  If Williams’ numbers are anywhere near accurate, we already have a far worse employment situation than what occurred during the Great Depression, which is usually estimated at 25%.  Presumably, that’s the reason Mnuchin picked the number that he did.

So much for the Daily Mail’s headline.

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Yahoo_Limit Down_2020_03_22_802pm

Yahoo finance reports US stock futures in ‘limit down’ status on Sunday, 3/22/2020.  Worth noting is Yahoo’s attribution of the crisis to the “coronavirus crisis.”  This is incorrect.  Our financial crisis is the responsibility of the Fed and those who justify and encourage its ungodly practices of debt creation, monetary debasement and bailouts.

“And we know that all things work together for good to those who love God, to those who are called according to his purpose.”

Romans 8:28

That was an interesting week.  Last week, I’m talking about.  The one where, if we are still working, we’re doing so from makeshift home offices, the one where governors are locking down the citizenry of entire states and shutting down their economies, the one where the financial markets continue of crash at a rate comparable to, or even exceeding, that of 1929, and this at a time when the Fed is printing more funny money faster than it ever has.

It would seem that Humpty Dumpty indeed has fallen, and all the king’s horses and men are working feverishly to put him back together.  Will they succeed?  That depends on your definition of success.  It may well be that by printing enough money and bailing out not just individual companies, but entire industries, the powers that be may succeed in extending the current politico-financial system a bit longer.  Maybe another year of so.  Who knows?  Longer term, it is doubtful that the current governmental and financial structures currently in place will be able to survive in their current form.  Change is going to happen.

Just to give you a idea about how desperate some in the political establishment haver become, last week a member of Congress suggested  that the federal government provide every person in America – she did not say citizens, but every person in America, which includes, among others, illegal aliens – with a pre-loaded debit card in the amount of $2,000, which would be renewed with $1,000 per month for a year.  That works out to $660 billion for the first month, then $330 Billion for the next eleven months.  If I’ve done my math correctly, this works out to almost $4.2 trillion.

How does she plan to pay for it?  This Congresswoman, Rashida Tlaib (D-Mich.), wants the Treasury to issue two $1 trillion platinum coins, have the Fed purchase the coins, then have the Treasury sweep the funds into the Treasury General account, from which the money would be disbursed to “every person in America.”

This is nothing but a massive dollar devaluation scheme, not unlike what FDR did in 1933-34 when he forced everyone to turn in his physical gold, then devalued the dollar about 70% against gold.  The biggest difference is that Tlaib’s scheme would be far more aggressive in devaluing the dollar, meaning it would be massively inflationary.  This can easily be seen if we consider the current price os platinum and the amount of investment grade platinum that is currently available.  The current price of platinum in US dollars is $618.61.  According to this article, there are about 8 million total ounces of investment grade platinum bullion available in the world.  At current prices, this means the total value of all investible platinum is about $5 billion.  If the US federal government used this entire 8 million ounces to mint two huge coins weighing 4 million ounces each, this implies that the dollar would be devalued against platinum to approx. 1/400 of its current value.  Put another way, platinum would go from $618.62 per ounce to around $247,444 per ounce.  Other prices would rise accordingly.  Put another way, the dollar would lose 99.75% of its value against platinum.  This is even enough to make an inflationist such as FDR blush.

Of course, it’s highly doubtful that, even if Tlaib’s scheme were put into practice, the coins – if you can call a 4 million troy ounce object a coin at all – would almost certainly be far smaller than in my example above.  This means that the devaluation of the dollar would be far greater than 99.75%

Further, Tlaib claims that her scheme is deficit-neutral, not requiring any new debt to be issued.  Perhaps I’m missing something here or have done my math wrong, but the cost of her program for one year is more than double the $2 Trillion value of her two proposed coins, so where does the other $2 trillion plus come from?

I went through the above exercise in some detail just to give you an example of the sort of absurd nonsense that passes for thinking among our leaders in Washington.  And while Tlaib’s scheme is ridiculous, it’s really not all that much more absurd than proposals being floated by the Trump administration.  Trump is talking about bailing out whole industries, having the federal government own stock of bailed out companies and sending checks to everyone as well.  President Trump himself has gone on record arguing for negative interest rates and quantitative easing.

As in 2008, so it is in 2020.  Government officials are running around with their hair on fire desperately trying to fix a debt crisis by, wait for it…taking on more debt!

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Financial Crisis

A prudent man foresees evil and hides himself, but the simple pass on and are punished.

Proverbs 22:3

The hits – negative economic news, that is – just keep coming.  To underscore what I mean by bad economic news, consider the following headlines from just last week:

Yet for all that, stocks hit a record high on Friday with the Dow closing above 28,000 for the first time.  CNBC’s headline on Thursday summed up the mainstream financial press’ exuberance quite well, “This is now the best bull market ever.”

How is it possible, on one hand, for there to be so much bad economic news and, on the other hand, for stocks to be hitting record highs?  We dealt with this topic last week, but this topic is of such importance that it bears additional commentary.  The answer to this question, to borrow a turn of phrase from one commentator I follow regularly, is that nothing’s real.  We have fake financial markets designed to manipulate your perception of reality.

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Financial Crisis

A prudent man foresees evil and hides himself, but the simple pass on and are punished.

    Proverbs 22:3

Dow hits record as stock market rally extends into 5th week” ran Monday’s AP headline. The same day, CNBC was even more ebullient, proclaiming “After Dow hits a record, analysts believe these stocks will lead the measure to its next milestone.” So what shall I say? The past three months I’ve been writing series talking about the ongoing financial crisis of 2008 and not only are the stock markets refusing to crash, they’re hitting records highs! To make matters worse, Yahoo reports that “Gold Suffers Worst Week in Three Years as Bulls Run for Cover.”

I guess I should just give up writing about financial matters, right?

Or maybe not.

You see, my thesis that the American economy has never recovered from the 2008 financial crisis is not based upon where the Dow or S&P averages close or the price action of gold and silver in a particular week.

As a Scripturalist, that is, as someone who believes that the Bible has a systematic monopoly on truth, I seek to analyze the markets and the overall economy, not by what the day’s headlines report, but by the propositions found in the Word of God.

When looked at in light of the Scriptures, we can see that what is hyped as the greatest economy ever is, in reality, a house built upon sand, which, in the opinion of this author, the coming economic storms will sweep away.

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Financial Crisis
A prudent man foresees evil and hides himself, but the simple pass on and are punished.

    Proverbs 22:3

It’s been a couple weeks since my last posting in this series, but there certainly has been no break in the flow of events. In the intervening time since my last entry on 10/20/19, there have been several noteworthy bits of financial news. Of those, the most important was the announcement from the Fed this past Wednesday that they had decided to lower the Fed Funds rate another quarter point. This was the third time the Fed has lowered interest rates in the past three months.

Now any such decision by the Fed is important given the tremendous power of the Fed to push financial markets one way or the other. The big takeaway, however, is what this decision says about the Fed’s assessment of the economy. Despite all the propaganda from the administration saying the economy is doing great, the decision by a the Fed, or any other central bank, to lower interest rates is a tacit admission that the economy is not doing well. If the economy were doing well, the Fed would be raising rates, not reducing them.

When you add to the Fed’s lowering of interest rates the ongoing (permanent?) bailout of the overnight repo market and the restart of quantitative easing (i.e. money printing), it is obvious that the those closest to the situation think that the economy is seriously struggling.

One of the justifications put forward for lowering interest rates and money printing is that there is no price inflation. But even according the Consumer Price Index (CPI), the official measure of price inflation put out by the Bureau of Labor Statistics, the CPI-U (the broadest measure of inflation) rose 1.7% for the period September 2018 to September 2019. But beware of official government statistics! Over the years, the federal government has changed the way it measures inflation. And it should come as no surprise that the change has been in the direction lowering reported inflation.

Economist John Williams runs a website called Shadow Stats where he purports to calculate inflation the old fashioned way. His most recent calculations of the CPI-U tell a very different story from the figures put out by the Bureau of Labor Statistics (BLS). As you can see Williams most recent numbers come in a little higher than those of the BLS. According to Williams, the official method of calculating inflation used prior to 1990 shows inflation running at a more than 5% annual rate. If you look at this calculations with the pre-1980 method, the difference from the current official number is even more striking. The pre-1980 method of calculating inflation indicates that the current inflation rate is almost 10% annually!

If Williams is even close to being right, all this latest round of money printing by the Fed is like dumping gasoline on a raging fire, meaning we can expect to see much higher inflation numbers going forward.

Here’s a critical idea to keep in mind when talking about price inflation: Inflation is always and everywhere a monetary event. By this I mean that inflation is always the fault of money printing by central bankers. You can watch the evening news faithfully for decades on end and you will not hear this. Ditto with the financial channels such as CNBC and Fox Business. They will never tell you the simple reason for price inflation: Central bank money printing.

Why is this? It’s not an accidental oversight. The mainstream press is essentially the propaganda organ of the establishment, and central bank money printing is the financial black magic the establishment uses to increase its wealth and power at the expense of ordinary Americans. The powers that shouldn’t be – Washington politicians of both parties, Wall Street bankers and big shot investors together with a gaggle of academic theorists and news media talking heads – have a great scam going and do not want to let ordinary Americans know how badly their being ripped off and by whom.

To borrow a turn of phrase from Warren Buffett, “If you’ve been playing poker for half an hour at the table and you still don’t know who the patsy is, you’re the patsy.”

Ordinary Americans have been the patsies of the financial elite, of whom Warren Buffett is one, since the founding of the Fed over 100 years ago. The Fed’s inflation games are not only bad policy, they are also sinful in the eyes of God. The Bible unequivocally condemns “divers weights and measures” which God calls an “abomination” (see Proverbs 20:10 and 20:20 for example), which merchants of the day used to rip people off in much the same way central bankers, politicians and their super wealthy clients do today. It’s high time people woke of to this fact. End the Fed!

There’s much more that could be said about inflation and, Lord willing, I shall discuss this topic in greater depth in the future. For now, though, it is enough to know that 1) the cause of price inflation in money printing by the Fed, 2) the current method of measuring price inflation deliberately and significantly understates its true rate and 3) these facts are not reported in mainstream news outlets in order to keep the public in the dark about what is going on.

“So what,” you may ask, “does any of this inflation talk have to do with financial prepping?” Quite a lot, actually. If we understand that a falling dollar is the product of the Fed’s intentionally increasing the money supply too fast, we are positioned to understand ways of protecting ourselves against the ravages of price inflation.

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