The Fed "printing" trillions is NOT inflationary (not yet, perhaps not ever)

Note: the following analysis is NOT quite like any I’ve seen elsewhere, either in “main-stream” media, in alternative media, or from economics professors of various schools. I’m not trying to tell you how other “experts” view our current monetary situation or future prospects. If you judge the following by how well it reflects any of these common narratives, you will find the following wanting.

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As I write this, for several months now, the Federal Reserve (Fed) has been “printing” trillions, buying up, or funding banks and hedge funds to buy up, trillions of dollars of stocks, bonds, treasuries, derivatives, swaps, and Lord (or more likely Satan) knows what else.

This should be inflationary, shouldn’t it? Shouldn’t we Americans be entering hyperinflation, as in other well known cases of a national bank printing currency like it’s going out of style, such as in Zimbabwe or the German Wiemar Republic?

But it’s not, so far anyway. A few prices are up, such as for meat and toilet paper, while a few prices are down, such as for gasoline and AMD Ryzen computer chips (a product near and dear to this geek’s heart.)

Why not? Why is there no particularly serious inflation, despite the unprecedented money “printing” by the Fed?

It’s the debt.

The central banks of the world, which tend to act in concert (or tend to get bombed into oblivion, such as in Libya or Iraq, if they don’t “cooperate”), have spent the last several decades building up the world’s debt. Individuals, businesses and governments, large and small, rich and poor, world-wide, with few exceptions (can you say “Russia”?) are deeply in debt.

With the combination of:

  1. the collapse of much world business due to the global “corona-lockdown”,
  2. the collapse in oil (both volume and price each collapsing to less than half, for a combined effect of less than a quarter of the usual revenue from petro sales),
  3. the collapse of wage and salary income due to high unemployment from the “corona-lockdown”, and
  4. the collapse in tax revenue, resulting from the above

we are ending up, in most nations world-wide, with individuals, businesses, and governments, large and small, rich and poor, desperate to make debt payments.

The U.S. Fed is essentially foreclosing on bankrupt corporations (in essence buying their stock and debt) and nations (buying their currency and debt).

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Let me make an analogy, that might put this on simpler terms, easier to relate to.

Imagine that you live on “the wrong side of town”, where some criminal gang (let’s call them the “Mafia”) has been running things for decades. They sell drugs and sex, run protection rackets, launder money through store fronts, bribe and blackmail politicians, judges and cops, murder those who get too much in the way, lie about all this in their controlled local paper, and have a few “charity” operations in order to steal more money while earning some “good press.”

… so far just a microcosm of how cynics like myself figure the elite bastards run things on this planet … but I digress.

But our not-so-elite bastards are not content to just keep their seedy “businesses” running along. They also build up “receivables”. Over the years, the local residents and businesses of our seedy neighborhood are increasingly indebted to these criminals. The local residents get to feed their families (or their drug habit), and get to stay alive and out of jail … but at a price. They “owe” “the man”.

Now let’s say the Mafia decides it’s time to collect on all those debts, tear down the neighborhood, and embark on some major urban renewal. So they deliberately run a crime spree through the neighborhood, and print about it in scary newspaper headlines. People stop visiting our neighborhood. People stop going out to shops, bars or hairdressers. People shelter in place, unable to work if they had a job, or unable to keep their little business open for lack of customers. Landlords can’t collect rent.

Now this puts the Mafia in the cat bird seat. They can pick and choose who or what they want to buy, for pennies on the dollar, and let the rest collapse and fail. They can agree to make the rent or car payment for the chosen ones, but if you’re one of those chosen ones, you have to make a deal with the Devil … “they” end up owning that business or car (or your lovely daughter or whatever they valued.)

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Back to “real world” reality … the above is a close analogy to what’s actually happening, world-wide.

For example, it’s exactly how China has come to hold a 99 year lease on the Hambantota Port in Sri Lanka.

For another example, it’s exactly how the Fed’s balance sheet has ballooned to $6.7 Trillion dollars, and counting. As Gregory Mannarino says, they (the Fed) wants to “own it all” (well, all that they consider worth buying.)

The Fed owns the most valuable instrument on the planet right now, the US Dollar printing press. Everyone (almost) is desperate for Dollars to make debt payments. The Fed can buy whatever the hell they want to buy, without limit.

Whether or not this turns into hyperinflation (the US Dollar collapsing in value) depends on what the Fed and their cohort the US Treasury do after the Fed is done buying.

If the Fed continues to “print” US Dollars, we get Dollar inflation, else Dollar deflation. The usual forecast in the gold bug and silver stacker circles in which I read is that it will be inflation, because that’s what most nations due when they get too far in debt and their debt is denominated in their own national currency - they print their way out of the problem. Those holding the bonds of that nation get their bonds paid back, but it’s in currency that is no longer worth much.

However I suspect that forecast is flawed.

The United States government does not control or issue the Dollar. The Fed does. It creates dollars by creating more dollar denominated debt, and removes dollars by extinguishing that debt.

The United States Dollar is the quintessential debt currency. The Dollar is lent into existence by and at the whim of the Federal Reserve. That’s why I’ve sometimes put “printing” in quotation marks above. Dollars are not “printed” into existence. They are lent into existence, in exchange for some sort of bond, bill, note, IOU or other dollar denominated debt instrument or other encumbrance on future income or property.

(The above two paragraphs are perhaps the most important two paragraphs in this entire article.)

The Fed, and the Fed’s owners, aka the Banksters and their elite bastard controllers, will decide whether the US and most of the rest of the world enters a deflationary collapse or an inflationary collapse. It is they who will decide whether or not to issue yet more debt.

The politicians in Washington, DC don’t control the Dollar. Rather the elite bastards control the Banksters, who own both the Fed and those politicians. It is they who decide when and to whom to issue, or call in, debt and its ledger counter-party, money.

In any case, for now, and regardless of whether there is monetary inflation or deflation in our future, the average person will be increasingly hard pressed to obtain the basics of food, clothing and shelter. Many will die, whether from pandemics or famine or vaccine caused illness (masquerading as pandemics) or other medical or agricultural malpractice (also masquerading as pandemics.)

My rough expectation is that this will end like the Great Wars and Depression of 1914 to 1945 ended, with a new burst of economic activity and technological advancements, including new forms of energy and propulsion, with major mineral mining operations extending out into the solar system, and with major “advancements” in the basic sciences. Just as nuclear physics, computers, televisions, and wide spread use of airplanes revolutionized the fabric of our world economy and society after World War II, similarly perhaps to an even greater degree the coming advancements will revolutionize our civilization again.

Meanwhile, hang in there, resist, help each other out, and do one’s best to stay informed (which is a key purpose of this here “theMooster” website). We are in an information war. Those who can figure out what’s going on, well enough and soon enough, are more likely to survive.

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The death of the Petro-Dollar, as petroleum is soon no longer our civilization’s primary energy storage medium, is spelt out in more detail in my article Energy, Tesla, and the new energy grid.

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Thank you for this excellent post – (the OP)

I saw it late yesterday and chose to read it this morning once a good cup of coffee had kicked in. I’m glad I did as this post really seems to have hit the nail on the head.

The analogy is right on.

If I were “the shot callers” for the US, I would do the following:

I would tell “The FED” – “Go “F” yourself”

I would print our own USD currency and allow all holders of FED “dollars” to apply to have their FED “dollars” replace by a real, “basket of commodities” based US Dollar.

I would inform foreign “debt holders” of the contact information of the FED.

Since the US is Oil/Gas energy independent, I would allow the US producers to trade their oil in the new US Dollar.

I would create a ten year plan for all disrupted US based businesses to transition to the new currency by propping up these businesses so as little fail as possible.

I would partner with the essentials like the food supply, etc. to ensure little disruption.

I would bring to the US as much manufacturing as possible so there’s little to no dependence on foreign supply sources for any essential and for as much other products as possible.

And then cross my fingers that American Exceptionalism and the American Spirit rises up and does its part.

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Once many of the shale oil frackers have gone through Chapter 7 bankruptcy (liquidation), then the energy independence of which Trump is so proud will be a thing of the past.

Shale oil fracking risks being a negative three ways: a net negative energy wise, a net negative investment wise, and a net negative environment wise. That’s not a good long term solution.

Agreed about all 3, yet, that won’t happen overnight. Also… there’s few of these frackers that are over leveraged relative to the full lot. The New US Dollar provides the opportunity for the price of oil to be set such that these folks stay in business while the transition to New Energy takes place which, I can’t imagine, would happen over night. Seems to me a good 15 to 20 years out type project.

That could be. My track record on the timing of my forecasts is dismal … on a good day.

Be that as it may, I am presently more negative on shale fracking prospects over say the rest of this year, 2020, than I take you are.

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Or if the Fed comes “in between”, I guess we get what’s called stagflation:

Stagflation is a seemingly contradictory condition described by slow economic growth and relatively high unemployment, or economic stagnation, which is at the same time accompanied by rising prices (i.e. inflation).

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Like it seemed we had during Obama… ??

My track record is horrid too.

Do you value the information from Catherine Austin Fitts?

I always found this one featuring Aaron Russo -

The archtypical stagflation was during the 1970’s, especially during Ford’s and Carter’s terms. But you may be too young to have that seared in your memory banks.

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Listen to Jim Willie, starting at the 7:03 mark in his interview last month with William Mount, for part of what my current understanding of the shale fracking market is based on: https://youtu.be/eAggvgLsGzk?t=423

From Jim Willie’s comments here and elsewhere, I take it that major pillars of the current monetary/financial system are blowing up, that the use of Dollars to buy Oil, aka the petro-Dollar, is one of these major pillars, and that shale fracking in the U.S. is one of the weaker pillars, with more debt over hang, and with a cash flow more at risk from low oil prices. When the Banksters slow down rolling over and expanding shale fracking debt, along with a weak oil price, the frackers get squeezed in a mighty, lethal, vice.

From elsewhere, I forget where now, I’ve come to figure that the shale frackers have only been able to make payments on their debt by borrowing yet more, to increase production, because existing wells keep drying up sooner than their published business model expected.

This sort of business model is a well known variant of the classic “Sell at a loss and make up for it in volume.” In the case of the frackers, it’s “borrowing to fund projects that have lose money, and making up for it with more debt.”

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Speaking of Jim Willie and William Mount, they have done another interview. If you like their interviews, then here are the three parts of this latest interview:

Here’s a brief summary of what William Mount, in this interview with Jim Willie, and in other of his recent work, has been saying. This interview with Jim Willie in particular goes into more detail than I’ve heard before as to the steps that have happened so far in the financial reset, and what they anticipate will be happening over the next year or two.

It seems that, roughly speaking, they figure there are three major groups at play here, on this planet, at this time:

  • The Rothschilds/Rockefellers, who have specialized in banking, petro, pharma and chemical over the last one to three centuries.
  • The drug running, organ harvesting, bioweapon and nuclear weapon trafficking, vaccine and glyphosate producing, money laundering, crowd that gained major power especially after World War II.
  • The ancient power families, both in Europe and the Orient, who have accumulated hundreds of tons of gold over the millenia.

It would seem, as might be expected, that the ancient families have the upper hand, and that the youngest of these three groups, the drug et al running crowd is being trimmed way back, while the big petro-pharma-chem-banking Rothschild and Rockefeller crowd willh have to make some major adjustments.

It seems that some effort is being made to allow those who have some savings and investments, whether thousands or mere billions, to have a fair chance of coming through the transition without too great a haircut.

Gold, a major wealth marker of the ancient power families, will increase in $US denominated value, from about $1700 per ounce now, to over $2000 in coming months, and over $3000 or $4000 or higher within a year after that. At least one gold and silver trading platform, the Comex, is already a bankrupt disaster zone, where trading lawsuits is the order of the day, not trading precious metals. Silver will likely increase in value relative to gold from the current 1 to 100, closer to its historically more common ratio of perhaps 1 to 20 or 40 versus gold. So if gold went to $4000 per ounce, then silver might go to $100 to $200 per ounce.

Meanwhile, one can expect the crowd that is drawing the short straw, the drug et al running crowd, to make as big a mess as it can this summer. As we’re already seeing with the riots breaking out in Minneapolis/St Paul these last two days, it’s going to be a “hot” summer. Animals are most dangerous when they are near death.

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If you have already viewed the above post in the last couple of days, you will now notice that I’ve added the third and final video in the sequence of three videos that William Mount uploaded, of his interview of Jim Willie.

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… and that third and final video of Mount’s interview of Willie is a block buster.

Let me summarize some of what Jim Willie packs into these twenty minutes:

An insider told Willie that the political European Union in Brussels will continue. But the Euro (European Monetary Union) will split off the southern nations. The nations Greece, Italy, Portugal, and Spain will have to return to their own currencies, while the northern European nations will reform a monetary union around a gold Euro.

The new monetary system will have gold in a major, essential role. Some new technologies, including energy, will require silver in essential roles. Silver might go to $200 then in a fair market might go to $400. These gold and silver standards were established in 2014, but the US broke the agreement later in 2014 by invading the Ukraine.

There is a lot of various major fraudulent assets that need to be cleaned up. The reset is very complex.

Willie figures there are two major competing groups:

  1. One he calls the “white hats”, who intend to use their gold and influence to clean up some of the corruption, establish more fair and open markets. The bailouts of some of the big banks may require them to declare a force majeur and forgive home, student, and car loans, in return for having their massive fraud covered.
  2. The other major group is comes from the Rockefeller-Medical-Pharma-CDC-WHO interests. These are the ones pushing vaccines, limited travel unless you can prove vaccines, as well as 5G, which Jim Willie understands can burn lung tissue, cause peumonia, and may be a cause of many of the deaths attributed to the corona virus.

Willie expects more liberty, new businesses and technology, a new digital currency, and greater prosperity if the “white hats” win.

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I am 1 1/2 the way through the series of three - At where Jim Willie says, “Comex is broken.”

I am already “WoW!”

It is such a waste of time to even turn on a “TV” for even a half second… even if one thinks they are good at reading between the lines.

[EDIT UPDATE] - As the “riots”… (which seem so obviously engineered… while governors and Trump sit back and essentially watch and do nothing… also, obviously “instructed” to do) … as these riots escalate it is all so surreal. When I look outside my windows or venture into the neighborhood, I see lovely sun, I see joggers and families with strollers, I hear birds chirping as I feel a soft breeze. Super surreal.

Mooster, do you subscribe to Jim’s newsletter?

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One quick comment - It seems you wrote your OP near 4 AM on May 25th. It was that afternoon George Floyd was killed.

Uncanny timing for your post, Mooster.

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When I could afford to, I have, on and off over the last decade.

My modest income has other priorities at the moment.

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