July 1, 2022
MOVCAC Contributor: Sean P. Keefe
As chronicled in the first six parts of this series, since the fall of 2019 our society has sustained ongoing attacks affecting our culture in ways that are meant to disrupt and destroy our way of life. I submit to you that these attacks have been deliberate and coordinated with the World Economic Forum (WEF), Global Elites, and the leaders of the American Uni-party. One only need look at the campaign slogan used by Joe Biden in the runup to the 2020 election. “Build Back Better” was not a DNC or Biden invention. The WEF rolled this out well before Biden was the nominee. It is not hidden, and one can find documentation of this on the WEF website. This globalist agenda cares neither for our constitutional or human rights – “You’ll own nothing and be happy”.
You may ask why global leaders and our own countrymen would work so hard to destroy our society. The simple answer is that they needed to destroy our society before they could destroy our economy. They had to keep us preoccupied and divided by emotional issues so that we would not see and understand the economic asteroid headed to western economies. While the people are distracted with the circus created by elected leaders and their media henchmen around social topics (gender, religion, race, class, political party, and sexual orientation), those causing the distraction were robbing We The People of our wealth and future.
Disclaimer – I am not an economist. I was educated as an accountant, passed the CPA exam in 1994, and have worked in the American economy as an accountant for thirty years. The following analysis is not an academic endeavor, rather, it is an analysis using common sense and a great deal of professional experience. I know this next part is boring, but if you wish to understand what is happening to our economy, it is worth the struggle.
The central bank system has been living on what is called Quantitative Easing (QE) (Forbes Advisor – Quantitative Easing Explained) for some time now. In a nutshell, QE uses the money supply to keep interest rates low and provide liquidity to the economy – they print money. The United States has been able to print money like a drunken sailor because of the petrodollar. Simply put, the dollar, as the world reserve currency, is used to settle most purchases of oil. Because the dollar was needed to settle oil contracts, the demand for dollars has always been sufficient to support our issuance of ever-increasing debt.
In 1971, U.S. stagflation prompted runs on the dollar. Many countries asked to redeem their U.S. dollars for gold. To protect the remaining U.S. gold reserves, President Richard Nixon removed the dollar from the gold standard. (The Balance – What is the Petrodollar)
Since a holder of a Federal Reserve Note can no longer redeem that note for gold, the only thing backing the dollar is the full faith and credit of the United States Government.
The purpose of the U.S. Dollar discussion is to help explain inflation. Simply put, inflation is the devaluing of fiat currency (U.S. Dollar or Federal Reserve Note). One must understand that each dollar printed by the central bank (at best a quasigovernmental organization) carries with it an interest burden. The central bank loans money (that they print out of thin air) to the government and to business in order to keep the economy running smoothly. Since that money loaned is paid back with interest, in effect that dollar issued was already worth less than a dollar at the moment of creation. This alone helps one understand why our Founding Fathers were opposed to central banks.
In summary, as long as there is great demand for U.S. dollars, we can continue to print and keep inflation and interest rates under control. It is economics 101 – supply and demand. When demand for dollars is high the value (purchasing power) is sustained. As demand wanes, whether because we closed the economy down or because Russia is now settling oil contracts with gold-backed Russian rubles, the supply remains high causing the value of that dollar to plummet – thus inflation. It is not that there are more resources needed, either labor or raw materials, that makes the car more expensive each year; it is the loss in value experienced by the currency you use to consummate that transaction.
You might ask how an 80-inch flatscreen television can go from $5,000 seven years ago to $1,500 dollars today. When productivity gains outpace the rate of inflation, the cost to make and purchase can come down. Many of the products we purchase are no longer made in developed countries where regulation and labor costs are tied to domestic policies. The real inflation in consumer products has been hidden by moving those manufacturing facilities to developing countries where input costs are greatly reduced. The automobile manufacturing industry remains mostly in developed countries and thus any productivity gains are being outstripped by inflation. The same is true in the housing industry; domestic policies trump productivity gains.
Either our Federal Reserve governors are morons or they are willfully destroying the value of the dollar. In the chart below, M-1 money (Money Supply Charts Through March 2022) growth is shown shattering the ceiling on the way to astronomical heights in the last couple of years (author added emphasis in red on the chart).
Again, I’m no economist, but if you reduce the demand for dollars at the same time you are increasing the supply, there is only one way for the value of those dollars to go.
Your government doesn’t tell you the truth when it comes to inflation. They are constantly changing the way it is calculated in order to hide the cause of inflation while lulling you to sleep with boring economic narratives and mind-numbing numbers. Hopefully, the following can explain the erosion of American purchasing power in a way that inflation numbers cannot.
The best way to understand inflation is to look at the makeup of family income. Early in the last century women in the workforce were the exception rather than the rule. After WWII, a single income family could afford a house, a car and vacations without much stress. It was the post-war boom and the dollar was king. As the sixties approached, women began entering the workforce in much greater numbers. By the time stagflation hit in the seventies, it was not uncommon for both heads of a family to be working fulltime. This increased income did not equate to increased wealth. The second income had become necessary just to sustain the way of life families had become accustomed to in the fifties.
The eighties and nineties saw the rise in credit card usage by regular people. Credit became the new revenue. At the time the Federal Reserve Act was passed mortgages were not available to the common man. As noted at Mortgagecalculator.com:
The rise of the United States mortgage market occurred between 1949 and the turn of the 21 st century. In fact, the mortgage debt to income ratio rose from 20 to 73 percent during this time. In addition, mortgage debt to household assets ratio rose from 15 to 41 percent. The American federal government’s intervention in mortgage-based lending caused this rapid growth, thus setting it apart from the rest of the world. The American mortgage has its roots in the founding of the first legitimate commercial bank in 1781. Once established, a new system of banknotes exchange, governmental interplay, and lessened liability on the behalf of bankers caused the ripple effect in the United States mortgage market.
In order for families to continue to live as they had in the decades prior, debt of all sorts became the rule rather than the exception. The chart below from Slate.com shows the dramatic rise in consumer debt beginning in the early eighties. The steep growth to nearly 100% of GDP was only stopped with the housing bubble of 2008:
In short, the Federal Reserve system of banking is set up to fail, and those running it know it. In the western world, this system has reached its end.
We have been living in a credit society and that cannot last forever. You can only send so many jobs overseas before the people living in your own country can no longer trade their skills for a living wage. This is not just an American problem. As noted by Reuters, Global debt is fast approaching record $300 trillion:
What does this mean to the everyday Joe or Jane? It means that inflation will rise until Quantitative Tightening (QT) occurs. And how does the central bank tighten the money supply? They raise interest rates. Many believe that inflation cannot be contained until interest rates exceed the inflation rate. It has been reported that the May 2022 inflation rate reached 8.6% (Inflation hits 40-year high as CPI rises 8.6% in May – Yahoo Finance). That means that in order to begin to get control of inflation, interest rates must hit at least 8.7%; and that’s the interest that the Federal Reserve would have to charge. What will that mean to mortgage rates and the housing market?
QT will necessarily slow down our economy. A recession is defined as two consecutive quarters of declining GDP. First quarter 2022 GDP declined by 1.5% and estimates of 2nd quarter growth have been revised down to a 0.9% increase. What is going to happen the rest of the year as we watch the Fed raise interest rates?
This rise in interest rates will not only affect the budgets of homeowners and the working class, federal spending is segregated into two types – discretionary and non-discretionary. Nearly 70% of all federal spending is non-discretionary (or mandatory). Included in this category are entitlements like Medicaid, Medicare and interest on the national debt. Our current national debt sits at $30 Trillion.
During the Quantitative Easing years, our interest on that debt has remained low. With inflation rising, interest rates will follow and the interest on our national debt will rise as well. This non-discretionary spending must be appropriated and paid. There are no negotiations in congress.
As interest rates rise the portion of the federal budget dedicated to debt repayment must rise as well. What impact will that have on other areas of the federal budget? Will services have to be curtailed? Will taxes need to rise? The answer to both of those questions is an emphatic yes – Just ask Greece! And Quantitative Tightening will not only affect how the government borrows, lending to businesses will be slowed down as well. What will that mean to the working class? If businesses struggle to find access to funds, they will hire less and they will pay less. It is a death spiral that has no end. At what point is the full faith and credit of the United States no longer worthy of first-class status?
Both Jerome Powell (Federal Reserve Chairman) and Janet Yellen (Treasury Secretary) lied when describing inflation last year as transitory. They are highly respected and entrenched macro-economic thinkers. We are supposed to believe they saw the increase in M1 Money, the reduction in productivity (due to mandated lockdowns), and the artificial inflationary pressures put on energy costs from the Biden Regime. They imposed these draconian green energy policies and they really thought inflation was going to be transitory?
If they missed all those indicators, they are incompetent and not worthy of the lofty positions they hold. But they haven’t missed anything. They know exactly what is causing this inflation, and they are lying to the American public about it. They have knowingly hidden this economic asteroid from the public because they know it is inevitable.
In the last few years, the Powers That Be have used the following tools to steal trillions from the working class and transfer that wealth to the American oligarchs orchestrating the destruction of the American economy:
Money-Laundering War in Ukraine – US funding of Ukraine’s war more than two-thirds of Russia’s entire annual military budget
Their next move will be to introduce a Central Bank Digital Currency (CBDC). This CBDC will replace cash and will be managed by the same incompetent people responsible for economic catastrophe we are experiencing. The biggest difference will be that instead of having cash in your pocket and the freedom to spend it wherever you wish, the Central Bank will have ultimate control of your CBDCs. If you display wrongthink, they can turn off your digital cash. If your carbon footprint grows too big, they can turn off your digital cash. If they don’t want you spending currency on any specific activity, they can set rules to determine if a transaction is acceptable. Welcome to the social credit age.
Simple Truth – Our own government has used the social engineering tools of race, sexual orientation, political affiliation, religion, class and gender to keep us divided while they plundered our economy. They removed our currency from the gold standard, used the illusion of free trade to steal our jobs and hide inflation, and weaponized our medical industry in order to blame a virus.
Capitalism is the use of markets to allow for the most efficient allocation and use of resources. Perhaps we should get rid of all the oligarchs and corrupt bureaucrats and see if real capitalism would work?
Their system is unsustainable, and they need these distractions in order to manipulate the public into their Great Reset. Don’t be fooled – Be prepared.