So far in this series, we’ve seen how the United States has taken the same steps towards economic doomsday that Europe has; made the same blunders that are now bringing Europe to its knees:
First, Washington spent everything in could collect in taxes …Second, it borrowed all it could from citizens and spent that as well …Third, it borrowed even more from foreign governments, banks and investors and blew that, too …Fourth, with the economy now slowing and tax revenues plunging, it has just called its own ability to pay into question.
Now, in its fifth step toward financial doomsday, Washington is cutting its own throat — by stiffing the very people who lend it the money it needs to survive …
Washington has declared WAR on the U.S. dollar.
When Fed chairman Ben Bernanke cranks up the printing presses, every dollar in circulation loses some of its value. The more the Fed prints, the more the dollar’s buying power plunges.
And the more the dollar falls, the less incentive foreign investors have to continue loaning us money — let alone to hang on to the Treasuries and dollars they already own.
For the past few years, the Federal Reserve has been totally, completely, and unambiguously out of control: It’s spewing out dollar bills like a malfunctioning ATM.
In 1999, to prevent the Y2K bug from torpedoing the banking sector, the Fed printed $73 billion.
After the 9/11 attacks, the Fed did it again — printing $40 billion in new, unbacked dollars.
But that was nothing compared to what the Bernanke Fed is doing now!
Since Lehman Brothers blew up in 2008, the Fed has flooded the world with a whopping $1.6 trillion in newly printed greenbacks!
That’s 22 times more than back in the Y2K days …And a whopping 41 times more than the Fed printed after 9/11!
Moreover, Bernanke launched the $1.7 trillion QE1 program in 2009. Then he promised to print another $600 billion as part of the QE2 effort launched in the fall of 2010.
Neither money-printing escapade managed to spark real, sustainable economic growth or provoke a surge in hiring. All they did was inflate asset prices and send commodities through the roof — decimating Main Street America while enriching Wall Street fat cats!
But that isn’t stopping Ben. No sirree!
Bernanke and his buddies at the Fed just said they “discussed the range of policy tools” they have on hand and pledged they were “prepared to employ those tools as appropriate.”
That’s Fed-speak for “Watch out! It’s almost time to fire up the printing press again!”
Albert Einstein famously said the definition of insanity was doing the same thing over and over again and expecting a different result. But at the Fed, this insanity is considered sound monetary policy!
Look folks, if printing money was an easy, painless way to prosperity, wouldn’t every country in the history of mankind have just done it?
But we know what it accomplishes. We know that it destroys national wealth … and in extreme cases, helps lead to revolution.
Heck, it was the Weimar Republic’s disastrous money-printing campaign in the 1920s and 1930s that helped lay the groundwork for the rise of Adolf Hitler!
Is it any wonder the dollar just fell to an all-time low against the Swiss franc? Is it any wonder the dollar has plunged against the Japanese yen, or Singapore dollar? Is it any wonder that gold — the ultimate form of money — exploded to a fresh all-time high of over $1,822 yesterday?
Now imagine that you are a foreign investor. You own U.S. Treasuries. They are denominated in U.S. dollars. Your yield is paid to you in U.S. dollars. And when your Treasuries mature, your principal will be repaid in U.S. dollars.
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But thanks to the Fed’s money-printing addiction, those dollars are losing their value at a ratethat dwarfs the paltry yields you’re earning.
The simple act of buying a U.S. Treasury bond GUARANTEES you’ll lose money!
So how much longer do you think you would continue buying and holding U.S. Treasuries? How much longer would you continue throwing good money after bad?
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