Updated: Jan 17, 2022
Arrogance or Intelligence? For many years, I believed that the Federal Reserve Bank consisted of intelligent men and women that would carefully defend and uphold the value of the US dollar and keep the charade going for generations to come. No longer will I be fooled by the all powerful money printers. They are not intelligent after all. They are playing their last poker hand and showed their cards to the table. The pure arrogance of the Federal Reserve bankers and their partner central bankers around the world has exposed the mortal wounds of the fragile fiat green paper for all to see. In fact, their monetary intentions are clearly stated in the Fed’s Statement on Longer-Run Goals and Monetary Policy Strategy as amended effective August 27, 2020. Recent Fed governor and Bank of International Settlements (BIS) speeches further support this declared and perpetual inflationist policy. Ben Bernanke was indeed correct when he stated in his 2002 speech Deflation: Making Sure “It” Doesn’t Happen Here that “the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.”
Thank you Ben, Janet and Jerome, you have played the worst poker hands possible. You have no more bluffs left because no one will believe you any longer. You are not intelligent; instead your arrogance has caused you to misplay the biggest poker hand of the 21st century.
Definition of arrogance
: an attitude of superiority manifested in an overbearing manner or in presumptuous claims or assumptions
(Source: Merriam Webster)
Let’s discuss the words overbearing and presumptuous in more detail. Overbearing is when the Fed forces their zero percent interest rate (ZIRP), quantitative easing (QE), and Repo market interventions upon the American people. There are no democratic means, and the inference that the “Fed Listens” events culminated in the will of the people is ludicrous. Dr. Bernanke has pushed his failed doctrine of perpetual inflation upon the self-serving Fed governors. Presumptuous is when the Fed assumes that the American people will remain naïve and ignorant about fiat paper money, or that ZIRP and NIRP are sustainable policies.
I could write for hours about the predictable outcomes of today’s reckless money printing, but will leave you with the timeless words of Ludwig von Mises.
If once public opinion is convinced that the increase in the quantity of money will continue and never come to an end, and that consequently the prices of all commodities and services will not cease to rise, everybody becomes eager to buy as much as possible and to restrict his cash holding to a minimum size. For under these circumstances the regular costs incurred by holding cash are increased by the losses caused by the progressive fall in purchasing power. The advantages of holding cash must be paid for by sacrifices which are deemed unreasonably burdensome. This phenomenon was, in the great European inflations of the 'twenties, called flight into real goods (Flucht in die Sachwerte) or crack-up boom (Katastrophenhausse).
……But then finally the masses wake up. They become suddenly aware of the fact that inflation is a deliberate policy and will go on endlessly. A breakdown occurs. The crack-up boom appears. Everybody is anxious to swap his money against "real" goods, no matter whether he needs them or not, no matter how much money he has to pay for them. Within a very short time, within a few weeks or even days, the things which were used as money are no longer used as media of exchange. They become scrap paper. Nobody wants to give away anything against them.
Hurry up, the crack-up boom is fast approaching. If anyone thinks that sustainable deflation is coming, the Fed and global central bankers just showed you their final hand. I am “all-in” counting on more chronic inflation, asset price bubbles and Fed-backed deficit spending.