July 28, 2020
Gold and silver prices have climbed to record highs… Bitcoin has surged past $10,000… Rural homes and acreage are selling faster than they have in decades to folks anxious to get out of cities… And the stock market rallies on any new government stimulus news.
The chief U.S. economist at Deutsche Bank predicts that the Federal Reserve balance sheet will climb to $20 trillion. It’s at roughly $7 trillion now.
Who can fight against the tidal wave of money sloshing around in the system?
Meanwhile, more than 30 million Americans are unemployed… and rising. Millions will likely be evicted in the coming months, thanks in part to the government shuttering their workplaces. Politicians bicker over unemployment benefits and how much free money they can issue – most to vanish into the pockets of the biggest companies with the highest-paid lobbyists.
And practically no one realizes just how bad it’s going to get.
Wall Street investors, retirees with savings, and employees who can easily transition their work from the office to home are doing mostly OK… or at least better than their counterparts on the other side of our new COVID-19 divide.
But most Main Street business owners have been devastated. Blue-collar workers are realizing that while unemployment benefits are temporary, the layoffs aren’t. And families are feeling the pressure of a pandemic that won’t end amid government restrictions that shift based on politics rather than science.
America has successfully turned a health crisis into a looming financial catastrophe for the vast majority of the nation.
How will it ultimately end?
We suspect in violence… perhaps on a scale not seen in decades. The riots that we’ve seen in cities across the nation are only the beginning.
And the real cause behind the coming financial crisis is one that you might not expect. As former U.S. presidential candidate Dr. Ron Paul recently wrote in an urgent warning to the American public:
What the Federal Reserve is doing to you and your family’s future is potentially more lethal than the coronavirus.
As someone who spent 12 terms in Congress, I can tell you firsthand that governments love crises because when the people are fearful, they are more willing to give up freedoms for promises that the government will take care of them
Mark my words: recent government interventions will NOT save you or your family. And the mainstream financial media is NOT going to give you the information you need to get through this.
This is the first time he’ll address what happens now that the government’s dedicated nearly $8 trillion to fight the pandemic…
He’ll show you what happens to societies as money-printing spins out of control… and exactly where to put your money to come out on the right side of this crisis.
Contrary to what you might think, it has nothing to do with stocks or gold or real estate.
Then, read on for more from Dr. Paul on the Federal Reserve and how the coming crisis will be triggered…
Will the Federal Reserve Cause the Next Riots?
By Dr. Ron Paul
Federal Reserve Chair Jerome Powell and San Francisco Fed President Mary Daly both recently denied that the Federal Reserve’s policies create economic inequality. Unfortunately for Powell, Daly, and other Fed promoters, a cursory look at the Fed’s operations shows that the central bank is the leading cause of economic inequality.
The Federal Reserve manipulates the money supply by buying and selling government securities.
This means that when the Fed decides to pump money into the economy, it does so by putting it in the pockets of wealthy, and oftentimes politically connected, investors who are able to spend the new money before the Fed’s actions result in widespread inflation. Wealthy individuals also tend to be among the first to invest in the bubbles that form when the Fed distorts interest rates, which are the price of money.
These investors may lose some money when the bubble bursts, but these losses are usually outweighed by their gains, so they end up profiting from the Fed-created boom-bubble-bust cycle.
In contrast, middle-class Americans lose their jobs as well as savings, houses, and other assets when bubbles burst. They will also not benefit as much as the rich and well-connected from government bailouts and stimulus schemes. Middle- and working-class Americans also suffer from a steady erosion of their standard of living because of the Fed’s devaluation of the currency. This is the reason why so many Americans rely on credit cards to cover routine expenses. The Federal Reserve is thus the reason why total U.S. credit card debt is almost $1 trillion.
Big-spending politicians are also beneficiaries of the fiat money system. The Fed’s purchases of U.S. debt enable Congress to massively increase welfare and warfare spending without increasing taxes to politically unacceptable levels. The people pay for the welfare-warfare state via the Fed’s hidden and regressive inflation tax.
Low interest rates also benefit politicians by keeping the federal government’s interest payments low. This is an unstated reason why the Fed will keep interest rates near zero or even lower interest rates below zero.
In response to the government-caused economic collapse, the Federal Reserve increased the money supply by about $1 trillion from mid-April to early June. In contrast, it took the Fed all of 2019 to grow the money supply by $921 billion. Even before the lockdown, the Fed was massively intervening in the economy in a futile attempt to prevent economic crisis.
A coming crisis will likely be triggered by a collapse in the dollar’s value and a rejection of the dollar’s world reserve currency status. The economic collapse will be worse than the Great Depression. This will result in widespread violence along with government crackdowns on liberties, accelerating the U.S. slide into authoritarianism. The only way to avoid this is for Congress to make drastic cuts in spending – starting with defunding the military-industrial complex – and to audit then end the Fed.
Dr. Ron Paul is a former member of Congress and former presidential candidate. While in Washington, D.C., he was one of the few voices advocating for limited government, individual liberty, and sound fiscal principles. He is the author of the No. 1 New York Times bestselling books The Revolution: A Manifesto and End the Fed.
This article originally appeared at the Ron Paul Institute for Peace and Prosperity. Copyright © 2020 by Ron Paul Institute.
Now here are some of the stories we’re reading…
Gold price hits record high on new fears for the economy
Gold hit $1,944 per ounce earlier on Monday, beating its previous record of $1,921 set in 2011. It has now gained about 27% so far this year. Silver also got a boost, climbing more than 6% to reach $24.21 an ounce, eclipsing Thursday’s seven-year high.
Investors Set Aside Coronavirus Worries, Driving a ‘Melt-Up’ in Markets
Such powerful rises are a concern for analysts who worry that the investments will suddenly fall in tandem if markets or the global economy face a fresh shock. Many investors flush with cash raised during the early-year turmoil are amplifying bullish wagers while also paying more to hedge their bets.
The Chasm Grows Deeper and Wider
Even though the U.S. economy and stock market has boomed for the better part of 30 years, most Americans are actually worse off than they were decades ago thanks to stagnant wages and inflation. As a result, Americans have taken on more and more debt in an attempt to keep up with their former standards of living. And today, we’re at a point of societal explosion…
Shopify Saved Main Street. Next Stop: Taking On Amazon
While offices everywhere were able to pivot en masse to Zoom, retailers on Main Streets all across the globe were getting crushed. Many had never before processed a single online transaction, now needing to somehow flip a digital switch in order to stay alive.
Here’s how much school closures will cost parents in lost wages, reduce GDP – and negatively impact the nation’s education system
Though this period will have costs for everyone, rich and poor, it’s also likely to exacerbate the economic divide between countries and communities. Vegas and her team are working on an analysis to quantify that gap. Their preliminary findings suggest that, while school closures will likely have a large and long-lasting impact on the earnings of future workers around the world, students from low-income countries will be affected most.
And let us know what you’re reading at [email protected].
Publisher, American Consequences
With P.J. O’Rourke and the Editorial Staff
July 28, 2020