Sadly, what was true in 1775 is still true today—-bankers love to print money.
Of course, the reasons for this are twofold. One is that central bankers believe that they can somehow “manage” the economy through the manipulation of interest rates.
The second is that the government printing press is necessary to monetize the escalating federal debt that politicians not only hunger for but thrive on.
That’s because we don’t sell war bonds or raise taxes anymore. It’s too restrictive you see. Besides why bother when you’ve got tons of paper and the keys to the press
In short, it’s a combination of hubris, greed, and blind ambition. Other countries see this. And they’re buying gold. Tons of it.
But few American have gotten the picture. How could they?
After all, we don’t remember the fate of the Continental Dollar and our modern nation has never suffered from inflation so severe that it destroyed the dollar. That’s something that only happens to other countries.
Instead, we believe the bankers and the politicians. We see soft landings. We have lived our whole lives at the top of world heap.
How could tomorrow be any different?
But the truth is it could be very different. The rapid expansion of the money supply ensures it because when we devalue the currency by creating money out of thin air the result is inflation.
You see, today’s soaring gold price is not some anomaly. It’s a world wide vote of no confidence. It’s a vote against Fed and their dollars.
And as long as the world is restless with our increasing money supply, our trade deficits, our unfunded liabilities, and the complete inability of Congress to reign in government spending the dollar will be in harms way.
Unfortunately, this week it became a little worse.
From Bloomberg by Oliver Biggadike and Ye Xie entitled: Dollar Rally Crumbles as Fed Ramps Up Printing Press
“The rally that pushed the dollar to the highest levels since 2006 is in danger of crumbling as the Federal Reserve starts buying Treasuries and ramps up its purchases of mortgage debt, adding to a flood of greenbacks.
“The implications of today’s Fed decision are unambiguous,” currency strategists at Citigroup Inc. wrote in a research report within a half hour of the Fed’s decision yesterday. The dollar “should weaken,” they said.
Fed policy makers said yesterday they plan to buy as much as $300 billion of U.S. government bonds and step up purchases of mortgage bonds, expanding the central bank’s balance sheet by as much as $1.15 trillion. The extra supply of dollars threatens to overwhelm investors just as the budget deficit swells.
Fed policy makers said yesterday they plan to buy as much as $300 billion of U.S. government bonds and step up purchases of mortgage bonds, expanding the central bank’s balance sheet by as much as $1.15 trillion. The extra supply of dollars threatens to overwhelm investors just as the budget deficit swells.
The trade-weighted Dollar Index, which tracks the currency’s performance against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona, tumbled 2.7 percent to 84.595, its biggest one-day drop since 1971. That pushed its decline to 5.6 percent since reaching 89.62 on March 4, the highest in almost four years.
“Sell the dollar!” said Scott Ainsbury, a portfolio manager who helps manage about $12 billion in currencies at New York-based hedge fund FX Concepts Inc. “This is huge, huge. It’s equivalent to the Plaza accord. This is the last thing they have in the closet, and they used it a bit early.”
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