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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