RON PAUL 2012

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The Federal Reserve: More Lethal than Coronavirus
by Ron Paul

Last week the Federal Reserve announced it will keep interest rates at or near zero until the economy recovers from the government-imposed shutdown. Following this announcement, Federal Reserve Chairman Jerome Powell urged Congress and the Trump administration to put aside any concerns about the deficit and spend whatever it takes to stimulate the economy and combat coronavirus.

The Federal Reserve previously announced it would make unlimited purchases of Treasury securities, thus encouraging Congress and the president to increase spending and debt. With some members of Congress talking about another multi-trillion-dollar stimulus bill, and with President Trump proposing a two trillion dollars infrastructure plan as a way to get Americans back to work, it is obvious, and not surprising, that Congress and President Trump gleefully agree with Powell’s advice.

Increasing the purchase of federal debt is not the only action the Fed has taken in a desperate attempt to keep the economy afloat. Since the coronavirus lockdowns began in early March, the Fed has greatly expanded its balance sheet. The Federal Reserve has also launched an unprecedented program to “loan” money directly to businesses.

While some states are beginning to end the lockdowns, it may be months or even another year before all the lockdowns are finally ended. It is unlikely that the economy will completely recover after the shutdown ends.

The economy was teetering on the brink of a recession months before anyone heard of coronavirus. Last September, a panicked Fed began emergency infusions of cash into the repurchasing market, which is where banks make short-term loans to each other. The Fed’s balance sheet expansion also began in September. The Fed was also pushing interest rates down before the coronavirus panic, and it will likely keep rates at or even below zero long after the crisis related to the shutdown subsides.

Economic stagnation combined with zero or negative interest rates remove incentive for people to save. This depletes the supply of private capital available to invest in businesses and jobs. The lack of private capital will put pressure on the Federal Reserve to maintain, and even expand, its new lending programs indefinitely.

Each of the Federal Reserve’s responses to the coronavirus shutdown increases the distortions of the market caused by the Federal Reserve’s meddling with the money supply and interest rates. These increased distortions guarantee the inevitable crash will be much more severe than the current downturn. The one upside is that the next meltdown will likely lead to the end of the fiat money system and thus the end of the welfare-warfare state.

The only way to minimize the coming crisis is to begin immediately unwinding the current system. The first step is to end the lockdown and let businesses reopen and people go back to work. Congress must then begin challenging monetary policy by passing the Audit the Fed bill. Congress should also cut spending, starting with ending our hyper-interventionist foreign policy and bringing the troops home. Ending the welfare-warfare state and the fiat money system may cause some short-term pain, but that pain will be dwarfed by the long-term gains in liberty, peace, and prosperity.


http://www.ronpaulinstitute.org/archives/featured-articles/2020/may/04/the-federal-reserve-more-lethal-than-coronavirus/

https://www.youtube.com/watch?v=o1FfYr-A2Lg


NEGATIVE INTEREST RATES | GOODBYE ECONOMY:
Peter Schiff
3,618 views•May 31, 2020

Negative Interest Rates have hit the economy hard and Peter Schiff says
this could be goodbye!

"A dollar crisis is looming that will make the financial crisis look
like a Sunday Picnic"

The federal reserve had raised interest rates in December 2018 and
people believed the fed would raise interest rates - but instead of
hiking interest rates, they cut the rates.

What exactly changed? Why did they lower rates and not raise them?
Nothing changed.

The markets started to react to the prior rate hikes.
And then the fed pricked its own bubble, but it took a while
for the air to come out for people to realize it.
Had the Fed continued on its trajectory, America would be
in a worse recession than 2008.

And now they have postponed this yet again recession again.
Normal rates are not possible when you have abnormal rates of interest.
The Fed is smart enough to know that if they ever attempted to
normalize rates it would be highly problematic.

Had Hillary Clinton won the election, the Fed would have never raised
interest rates. America would have gone back to zero and the Fed would
have started QE.

Donald Trump created a lot of false optimism for the market, by cutting
taxes and government spending which created massive enthusiasm among
small business owners and entrepreneurs.

America is now operating using Keynsian Fiscal Stimulus.
Where Government spending has increased dramatically since
Donald Trump was appointed.
This is essentially borrowed money for social spending and military
spending.

Which is continuing the same failed policies of the last several
presidents.

The only difference between Trump from other presidents is
his style of talking and taking action.

The federal reserve is back to quantitative easing but they
don’t want to admit it.
And the balance sheet is growing faster and this is
the largest QE in history and monetizing the short term debt
means they're going to have to remonetize the debt when it matures.
This is very bad news-

“The fed helped create an economy that was addicted to cheap money”
Instead of allowing the debt to be liquidated in the crisis,
America has more debt than ever before.
The fed now has to keep the monetary spigot open forever.

When it comes to politics, nobody wants pain now. They want to push it
off to the next candidate down the path. This is why these failed
policies keep getting passed.

And Central NWO banks are dumb enough to buy negative bonds -
which is bad economics and terrible monetary policy.

The Fed can’t prevent the dollar from collapsing.
The coming currency crisis will make the finical crisis look like a
sunday school picnic. Everyone followed the herd.
They bought the dollar and sold gold based not he ridiculous belief
that the fed can do the impossible.

It is not okay and the Fed can’t reduce the balance sheet.
Once the dollar starts to fall on the fact that rates will
never normalize, a dollar crisis will begin.
As the inflation rate takes off, there will be a sovereign
debt crisis and only the Fed will be buying negative real yields.
Gold will take off and propel to new highs.

The Polical ramifications of this:
Trump is popular with tea party republicans.
Trump is running even bigger deficits when supposedly the economy
is at its all-time high?
What does that mean for deficits when times are bad?

The Democratic party and socialist party are all that's left of
the American political system.
With the Republicans becoming the new Democrats and
the Democrats becoming the socialist party.

No matter how many bonds the US government prints we can't pay for it.
The fed won’t be able to bail everyone out from a dollar crisis.
Otherwise we lose our purchasing power.

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#InterestRates
#Recession2020
#DollarCrisis


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God Bless America