The Consequences Of Ignoring Reality
Famed philosopher Ayn Rand told us, “You can choose to ignore reality; but you cannot ignore the consequences of ignoring reality.” If you bury your head in the sand long enough, you will eventually get bit in the ass….
Inflation has been skyrocketing and the government/media can no longer ignore it.
John Williams, at Shadowstats.com calculates inflation using the same method used in the 1980’s. Today it’s well over 15%. A Dallas Fed survey expects it to go higher.
Why has inflation skyrocketed over the last decade? The Fed, has ignored reality, pretending it does not exist, calling it transitory. The consequences of ignoring reality are now coming home to roost.
It’s an election year so they keep up their BS, announcing a ¼% boost in interest rates with the possibly of more to follow.
Pundit Bill Bonner offers some straight talk:
“As expected, Jerome Powell, Fed Chief, told the world that he is getting serious about whipping inflation now. He’s calling up a platoon of very mean girl scouts to lead the charge.
“With inflation well above 2% and a strong labor market, we expect it will be appropriate to raise the target range for the federal funds rate at our meeting later this month,” Powell…saying that he is “inclined to propose and support a 25 basis point rate hike” at the Fed’s March 15-16 gathering.
Is he kidding? A quarter point increase? That will bring the Fed’s key rate to about MINUS 7%. Is this ‘tightening?’ Of course not. Powell is not fighting inflation; he is enabling it.”
A few days later, he adds: (Emphasis mine)
“Stop the presses!
‘If we conclude that it is appropriate to move more aggressively by raising the federal funds rate by more than 25 basis points at a meeting or meetings, we will do so,’ Powell said in a speech to an economics conference.
…. Now, if it were serious about fighting inflation, it would have to boost rates by as much as 1,000 basis points – 10% – to get ahead of rising prices. But even a smallish move in that direction will almost certainly crash the stock market and the economy.
What to do? Pretend to do battle with inflation…and change the subject as soon as possible!”
A decade ago, Richard Russell wrote: (Emphasis mine)
“July 11, 2012 – Years ago I coined a phrase that described the US’s predicament. The Phrase was, ‘inflate or die’.
…. Now with a national debt of over $15 trillion, the choice has really come down to ‘inflate or die’.
The die part of it would be to allow the bear market to play itself out to the end – to the bitter bearish end. But this would be Great Depression number 2, and the country would surely not stand for it. It might even foment a revolution.
But how about the inflation part? The printing presses would have to go wild. Furthermore, enormous inflation would almost surely wreck the country. …. So inflate or die would have serious (most likely disastrous) consequences.”
As Mr. Russell suggested, the printing presses went wild. In ten years, the Fed created more fake money since the beginning of time. Our debt is now $30 trillion and likely to double in less than a decade.
Rather than allow the free market to reign, with the normal rise and fall, the Fed is hell bent on Wall Street boom times forever. If they don’t inflate, the stock market will correct, adjust, revert to norm, whatever. If it continues to inflate, as Mr. Russell said, it would “surely wreck the economy.” When you are holding a candle, burning at both ends, you are going to get burned…perhaps badly.
Why does Congress and the Fed fiddle, allowing inflation to soar?
Bill Bonner describes former Fed head, Paul Volcker:
“Paul Volcker was the last competent Fed chief. He was also the last one to tighten the money supply to stifle inflation. That is not to say that he was always right about what was going on. But when push came to shove, Volcker pushed back…and stopped inflation.
But that was 40 years ago.”
Don’t expect another Paul Volcker to swoop in like Mighty Mouse and save the day! Paul Volcker saw reality; skyrocketing inflation and a real risk of the dollar totally collapsing destroying the US economy. What he saw then, he would see today, only in trillions not billions.
Congress has wasted trillions on stimulus packages, buying votes and rewarding cronies, with the Fed’s printing presses working overtime.
House Speaker Pelosi was quoted, “@speakerpelosi: “When we’re having this discussion it’s important to dispel some of those who say, well it’s government spending. No it isn’t! The government spending is doing the exact opposite, reducing the national debt. It’s NOT inflationary.”
What kind of BS is that? What a commercial for congressional term limits…
Some pundits are discussing “The theory of unintended consequences”; decisions causing surprising unintended consequences. I DISAGREE. The government and the Fed know exactly what they are doing and what the consequences will be.
They choose to lie about reality, ignoring the consequences, while siphoning much of the wealth of the nation. They know exactly what will happen. Many in the political ranks want to destroy capitalism as we know it.
What they don’t want us to know!
The Federal Reserve is owned by the big banks, just like it was during the Volcker years. However, the nature of their banking business has radically changed.
In 1933 the Glass-Steagall Act was passed to protect the public. Banks were required to hold ample reserves and their loan portfolios were regularly audited. High risk loans and investment operations were not allowed by FDIC insured banks. Interstate banking was not allowed, no bank should ever be “too big to fail”. No depositor lost a dime after it became law.
The law was repealed in 1999, followed by a flurry of bank mergers and acquisitions. Big brokerage firms also merged with banks into what we now call “casino banks,” earning billions from their high-risk investment activities. The Fed’s owners are not focused on the banking business as we once knew it. They are now deemed “too big to fail.”
These top banks control much of the wealth of the nation, earning fees from investors. Their high-risk derivative exposure is in the trillions – all under the FDIC umbrella. The FDIC no longer protects us; but rather it uses taxpayer dollars to protect the casino banks making risky investments, while rewarding the elite.
Wolf Street calls it, “The Most Reckless Fed Ever” and outlines, what I believe is the INTENDED CONSEQUENCES – totally expected when Glass-Steagall was repealed:
“The Fed’s meme that money-printing helps the working people turned out to be BS.
The Fed has been couching its crazy monetary policies and refusal to deal with inflation as a way of helping the lower end of the labor market. But that is patently BS. And the Fed knew it.
…. But wait…there was a small group of huge beneficiaries from the Fed’s policies.
The Fed has long had as its official monetary policy goal the ‘wealth effect’.
…. What this wealth effect doctrine has accomplished…is the greatest wealth disparity ever.”
Wolf shows us the Fed’s “wealth effect”:
The rich get richer, while the middle class gets destroyed. The Fed buys protection from congress by enabling their reckless spending – suppressing free market interest rates, putting outrageous government debt on their books, not allowing free market capitalism to work.
G. Edward Griffin sums it up, “The Federal Reserve is a cartel- it’s a banking cartel. And like all cartels, it only has one purpose – and that is to serve the benefit of the members of the cartel, period!
The rich get richer, prices rise, wages don’t keep up, and the bottom 90% see their wealth destroyed. The stock/bond market bubble is going to burst, the working class are going to see their 401k savings take a huge hit.
Expect the Fed (cartel) to call it a Recession, implying they will fix it in a short time. Don’t buy their BS!
Ayn Rand warns:
“All depressions are caused by government interference and the cure is always offered to take more of the poison that caused the disaster. Depressions are not the result of a free economy.”
“Depression vs. Recession
A recession is a normal part of the business cycle that generally occurs when GDP contracts for at least two quarters. A depression, on the other hand, is an extreme fall in economic activity that lasts for years, rather than just several quarters.
…. Economic factors that characterize a depression include:
- Substantial increases in unemployment
- A drop in available credit
- Diminishing output and productivity
- Consistent negative GDP growth
- Sovereign debt defaults
- Reduced trade and global commerce
- Bear market in stocks
- Sustained asset price volatility and falling currency values
- Low to no inflation, or even deflation
- Increased savings rate (among those who can save)”
Flooding the banks with more fake money will just fuel the fire. Cut the crap! Reinstate Glass-Steagall.
Unlike the Great Depression, we are no longer an agricultural society where most people can live off the land. Anyone with wealth will be a target by both the government and others.
Americans will have to survive by hard work, ingenuity, and preparation. Those who don’t ignore reality and prepare will survive much better than those who don’t! Got gold?
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On The Lighter Side
I recently wrote about the special designated parking spaces in store parking lots. While I agree with “Handicapped Parking” some of the other (like “Tesla Parking Only”) designations went over the top.
We are in Indiana for a short vacation and I ran an errand to our local Lowe’s home center. As I pulled in their lot, I stopped cold for a second, holding up the traffic behind me. Is that sign what I think it is?
This probably sounds silly, but I proudly pulled in with my USMC sticker on my back windshield. There were four spots for veterans. Another car pulled in across from me, and another old veteran got out, we nodded, said nothing and hobbled into the store.
A big sign on the front of the store proclaimed, “Discounts for veterans.” When I checked out, I mentioned to the clerk I appreciated the spot. The clerk smiled and said, “We like to take care of our veterans here.”
I decided to take a picture and a sweet grey-haired lady yelled, “Thank you for your service!” We chatted a bit, she told me how her husband served, and it was neat.
I wonder if pregnant women feel the same way when parking in their spots.
There is a Home Depot right across the highway. I suspect Lowe’s will get most of my business in the future.
Quote of the Week…
“What has been holding this Wall Street house of cards together this long is the New York Fed’s willingness (even eagerness) to throw trillions of dollars at the problem at the earliest sign of a hiccup.
The fly in this ointment is that the New York Fed is literally owned by these same Wall Street mega banks while simultaneously creating emergency bailout programs and then outsourcing the work to the banks being bailed out. If ever there was the perfect design for a replay of the Hindenburg, this is it.”
— Pam and Russ Martens, Market Bubble Set to Explode, June 21, 2021
Today is the home opener for the Chicago Cubs. Let the games begin…
Friend Courtenay W. sends along some baseball humor:
- Reggie Jackson commenting on Tom Seaver: “Blind people come to the ballpark just to listen to him pitch.”
- Mickey Lolich, Detroit Tigers pitcher: “All the fat guys watch me and say to their wives, ‘See, there’s a fat guy doing okay. Bring me another beer.'”
- Tommy John, N.Y. Yankees, recalling his 1974 arm surgery: “When they operated, I told them to add in a Koufax fastball. They did, but unfortunately it was Mrs. Koufax’s.”
- Al Hrabosky, major league relief pitcher: “When I’m on the road, my greatest ambition is to get a standing boo.”
- Jim Frey, K.C. Royals manager when asked what advice he gives George Brett on hitting: “I tell him ‘Attaway to hit, George.'”
And my favorite: (probably some truth in this one too)
- Bill Veeck, Chicago White Sox owner: “I have discovered in 20 years of moving around the ballpark that the knowledge of the game is usually in inverse proportion to the price of the seats.”
Until next time…
“Economic independence is the foundation of the only sort of freedom worth a damn.” – H. L. Mencken
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