Let’s go back in time to the Roaring Twenties. The times appeared to be as wonderful as ever for just about everyone in America. After the 1920-1921 recession, the Federal Reserve Bank lowered the discount rate to a low of 3.5% in September 1927. But the easy money (and margin accounts) would keep the stock market’s rapid rise on its upward trajectory. The speculative mania of excess was in full swing. American extravagance was out there for the world to see.
The Dow Jones Industrial Average rose from 64 points in August 1921 to a high of 381 points in October 1929, equating to a 500+% return in eight years. Bank credit and profits in the stock market were so easy to secure that money did not seem to be real. Of course, the money was not real and neither was the prosperity. Gorging on the easy money and credit, the banksters of the time were doing what they do best and getting richer. They were borrowing and loaning massive amounts of money to anyone who wanted it. And everyone did. Very few sober and modest individuals had the willpower to resist borrowing money and joining the party. The banksters were not only entrapping the people with excessive debt burdens, but they were also reaping massive profits from their speculative bets on the U.S. stock market.
Fast forward to today. Does the backdrop I just described sound familiar? The decades of easy money interventionist policy from the Federal Reserve Bank, and the unprecedented Quantitative Easing (QE), Zero Percent Interest Rates (ZIRP) and global Negative Percent Interest Rates (NIRP) far exceeded the monetary excesses during the 1920s. Further, the current U.S. national debt of $30.5 TRILLION dollars is quite a bit more than the $17 billion dollars in 1929.
Turning to the title above…..History Repeats but with Different Consequences. The recent stock market sell-off has very similar parallels to the infamous Wall Street Crash of 1929. The NASDAQ Composite Index had risen spectacularly from a low of 1,268 in March 2009 to over 16,000 in November 2021, resulting in a 1,000+% return over a 12-year timeframe. The “Roaring Tens” of the early 21st century were arguably far more speculative than the 500%+ return during the 1920s. The evidence is clear and indicates that history may indeed be repeating itself. However, I strongly believe that the future outcomes for the American People will be horrifically worse than nearly a century ago.
The reason is simple. Today’s Board of Governors of the Federal Reserve System has decided to follow the lead of their most influential former chairman. If anyone does not know who Dr. Ben Shalom Bernanke is, then you should quickly familiarize yourself with the background and ideology of “Helicopter Ben”.
He scored 1590 out of 1600 on the SAT and then graduated from Harvard College with an A.M. in economics summa cum laude in 1975
He published extensive writings on America’s Great Depression with a passion towards understanding the causes and effects during this time period
He wrote and presented remarks On Milton Friedman’s Ninetieth Birthday before the University of Chicago in November 8, 2002 quoting “Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again.”
He wrote and presented one of his first speeches as a member of the Board of Governors of the Federal Reserve System entitled Deflation: Making Sure “It” Doesn’t Happen Here before the National Economists Club in Washington D.C. in November 21, 2002
I’ll stop here because the majority of his writings and speeches after 2002 were an infatuated continuation of the same distorted ideology. An ideology that somehow the magic government printing press and perpetual “easy money” could bring positive outcomes to mankind, i.e. the free lunch, without the damaging consequences. However, the free lunch does have costs, and the question is which individuals will bear those costs. Today, billions of people around the world are bearing the costs of higher food, energy and many other rapidly rising prices. In summary, Mr. Bernanke was properly described as “Helicopter Ben” and that nickname says it all: print enough green paper money and drop it from the skies so that every person will have money to spend, and you will achieve a utopian economy and society.
With the “helicopter money” ideology fully ingrained and routinely implemented at the Fed today, what reaction can we expect when the U.S. economy falters from the current rising interest rates and excessive debt burdens? Remember too that the Fed has recently implemented QE and ZIRP without hesitation, and with these unconventional tools now becoming standard practice, the future of monetary policy becomes clear. History has already repeated itself (with recent parallels to the Roaring Twenties and Wall Street Crash of 1929), and the consequences of the Fed’s monetary policy mistakes will be very much different. This time, the fragile fiat green paper dollar will not be able to survive another round of “easy money” generated from the government’s printing press and helicopter drops of money. The U.S. dollar is mortally wounded for the world to see…..and ACT.
It is now very late in this high stakes game of poker, and your actions in the coming months and years will determine your ultimate wealth and financial success. For insights into what is coming for the United States of America, see the post Arrogance at https://www.greenpaperrevolution.com/post/education-investing-fiat-money-austrian-economics. Owning some gold to protect against the collapse of the green paper dollar is another wise action to consider. Beware all of the red herrings that will be thrown at you by the deceitful banksters, media, government officials and Wall Street. The simple truth and current ideology of the Fed should be crystal clear to anyone with the most rudimentary understanding of economics. In conclusion, be ready for an historic mistake by the Fed as prophesized by Helicopter Ben. “Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again.” Hopefully one day soon, Dr. Bernanke and his disciples come to accept the truth about this fateful era in U.S. history. The severe and extended monetary easing policies of the Federal Reserve Bank actually CAUSED the Great Depression, and not the subsequent tightening of policy that was inevitable to restore moderation and sound money.