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June 11, 2021 | The Federal Reserve Has an Ulterior Motive

Is an American author of books and articles on economic and financial subjects. He is the founder and president of Agora Publishing, and author of the daily financial column, Diary of a Rogue Economist.

YOUGHAL, IRELAND – Well… yesterday we got the news. If we have $100,000 in cash today… at the present rate of inflation, it will be worth only $95,000 by this time next year.

Keep it up for 14 years, and half your money will be wiped out.

Barron’s has the details:

On a year-over-year basis, consumer prices increased 5% in May, well above the prior month’s 4.2% rate and the 4.6% expected print. Core CPI was up 3.8% from a year earlier, up from a 3% pace in April and above the 3.4% rate economists predicted. Those are the fastest rates of consumer price inflation since June 2008 and June 1992, respectively.

But those are just numbers. Not even true numbers.

After the feds finish torturing them, with their “hedonic” and “seasonal” adjustments… they’ll be ready to say anything.

So, let’s just try to figure out what is really going on.

Not Just Numbers

This week, we’ve been exploring “inflation.” We noted that it is not just a matter of numbers. Or price increases.

Prices are information. They are meant to put their hand on the Bible and swear to tell us the truth about what things are worth and what they cost.

But when the feds “inflate” the currency, they suborn the witness.

Yet, despite the arm-twisting, bribery, and tomfoolery, the numbers are beginning to move forward.

Durables were up more than 10% in May 2021 compared to May 2020. Nondurables rose 7.4%. Services, not including energy, gained 2.9%. And energy itself rose 28.5%.

And now, say Federal Reserve governors, “Don’t listen to them; they don’t know what they’re talking about. They’re just passing through… Things will be back to normal soon.”

Ulterior Motive

“Back to normal” for the Fed means something entirely different than what it means for us.

For them, “normal” is a fantasy world in which they can inflate all they want… but the price increases stay on Wall Street.

That is how “normal” has worked for the last 20 years. The Fed added $7 trillion to the nation’s monetary footing; the Dow more than tripled.

Of course, there was nothing “normal” about it. The Fed was simply inflating the wealth of the top 10% of the population, while deflating (relatively) the wealth of everyone else.

And therein, we have our motive.

To make a long story short, inflation is more like a handgun than a murder… more a means to an end – neither accidental nor unexpected – than an end in itself.

You’ll recall our definition of government: It’s how the elite control other people in order to protect and enhance their own power, wealth, and status.

In other words, government is always and everywhere a scam – in which the many are ripped off for the benefit of the few. Everything else is just detail.

Screwy and Absurd

And by the beginning of the 21st century, the coast was clear.

The old “gold standard” was long forgotten. Alan Greenspan, a shrewd opportunist, had long since replaced Paul Volcker at the Fed.

And the few remaining “conservatives” in Congress, who might have insisted on balanced budgets and honest monetary policy, were disappearing.

The Fed went to work.

Over the next 20 years, it inflated the money supply (its balance sheet) some 10 times – that’s 10 times more than it had added to the system in the previous 209 years.

And in the 12 months from March 2020 – with a Republican in the White House until January – the Fed added money at a 75% annual rate. In the last full fiscal year, the federal government spent $3.1 trillion more than it raised in taxes.

Is it any wonder that meme stocks go wild… that stimmy checks keep the zombies moving… that Tesla (TSLA) is going “to the moooon”… and Jeff Bezos is blasting into space?

It’s screwy and absurd. But it’s not all goofy fun.

Elite Heist

A high price is not the same as a false price. And a “fraud” is not the same as an error.

Over the last 20 years, the elite – who control the federal government and the Federal Reserve – used “inflation” like thieves use handguns, to shift wealth from other people to themselves.

They inflated the elite sectors – Wall Street, government, education, medical care, big business… while earnings and household wealth for most people slumped. Wages in manufacturing (where they make things!) actually went down.

Here’s a little item that is making its way around the Twittersphere:

Since 1978, CEO compensation rose over 1,000% and only 11.9% for average workers.

For many years, we’ve been mostly alone in noticing – a lonely kook, loquendo solo pro se. Neither conservatives nor liberals… Democrats nor Republicans… believed it.

“The money will ‘trickle down,’” said Republicans. “It will stimulate the economy and help the poor,” said the Democrats.

Besides, “if we can get control in the next elections,” they each told voters, “everything will be put right.”

Inflation Scam Continues

And the grift continued.

Under George W. Bush, the Fed’s key interest rate was dropped 500 basis points in the recession/9-11 hysteria of 2001 – causing the housing bubble of 2005-2007.

Next, the quantitative easing program – under Barack Obama – took it up a notch, putting $3.6 trillion of new money into Wall Street.

Then along came the MAGA Man, with even bigger deficits… more spending… and an explosion of Fed money-printing.

It didn’t matter who was in the White House. The flimflam was deeper than partisan politics.

More than just rising prices, inflation is a scam perpetrated by the elite of both parties… against the common man.

Stay tuned…




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June 11th, 2021

Posted In: Bill Bonner's Diary

One Comment

  • Tom Rogers says:

    Of all countries in the world , why do you choose Ireland which has the worlds worst lockdown , worst fake people who think they are friendly, hypocrites, worst company labour laws, only care about serving the American tech rich companies. The only good thing good about Ireland is the protestant areas of Northern Ireland which I doubt will exist much longer.

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