The lesson of this classic fable is that people refuse to believe a liar even when he is telling the truth. The Federal Open Market Committee (FOMC) members have told so many false and opinionated statements that have turned out to be incorrect that they can no longer be trusted. And what about the truths and facts that have been conveniently omitted from their mouths and official FOMC statements? Why do they not discuss the well-documented history of fiat paper currencies and their inevitable demise? Why do they not talk about the obvious links between easy monetary/fiscal policies and the creation of asset bubbles? Why do they not talk about zombie corporations and how they came to be? Why do they not talk about the disincentives to saving when interest rates are negative or zero percent (NIPR/ZIRP)? With no incentive for savings or bond market investing, where will the tens of trillions of investment dollars now go? Hint…there is no alternative (TINA) to the liquid equity markets, real estate or commodities trading. Speculation is predictably rampant and will lead to undesirable outcomes in the future.
Back to the timeless lesson of the fable and a recent example. Earlier this month, the president and CEO of the Federal Reserve Bank of St. Louis, James Bullard made headlines by mentioning that the Fed may have to start tapering unconventional asset purchases and raising interest rates in 2022, which is earlier than previously expected. The US equity markets sold off believing that the Fed may actually start tapering in the not too distant future. I DO NOT BELIEVE ANY OF THE FEDERAL RESERVE BANK OFFICIALS AND NEITHER SHOULD YOU. Their track record of incorrect forecasts, outright lies, convenient omissions and immoral deceptions speaks for itself. Their temporary and small tightening cycles over the last several decades have always proved to be unsustainable. The boy has cried wolf again warning about the need to be tighten monetary policy sooner than later. He warns that a “monetary tightening” is coming and that he will protect against the dangerous inflation sightings. But wisely this time, no one believes him. The people have learned that the boy cannot be trusted. A sustainable “monetary tightening” will never arrive. Instead, the multi-decade trend of continuously increasing money supply will continue in perpetuity, along with the daily deceptions about why more money supply is beneficial for mankind. If you believe the men crying wolf that they will protect the value of the fragile fiat paper dollar from chronic inflation, then you are going to be in for a big surprise!
Basically, James Bullard’s comments are all but guaranteed not to have any teeth and any resultant tightening of monetary policy will prove to be UNSUSTAINABLE. It will not be long before the FOMC again reverses course back to the multi-decade policy of fiat currency destruction. The Wall Street insiders, investors, bankers and government officials all understand this likely scenario, but do you? If you do understand what will be coming, how are you protecting yourself against the devastating consequences that today’s global and unconventional monetary policy will inevitably bring? One obvious action to take is to NOT save green paper dollars that will continue to lose their value with each passing day, month and year. If you want to retain true savings for the future then you should allocate approximately 5%-10% of your investment portfolio into real money physical gold coins that have proved to be timeless stores of wealth. The fragile fiat green paper is mortally wounded and the Fed is accelerating its demise. The men crying wolf cannot be trusted. After decades of massively increasing money supply and fiscal deficits, why would anyone believe that the Fed and CONgress will reverse course and protect the green paper dollar? Looking past their track record of deceptions and omissions, the Fed has promised, guaranteed and routinely acted to fulfill its Congressional dual mandate to maximize employment and create inflation. Also, the Fed amended its Statement on Longer-Run Goals and Monetary Policy Strategy in August 2020 to essentially guarantee perpetual inflation until the fragile dollar ultimately does collapse. The Fed has played their worst poker hand of the 21st century and has no intentions of changing their inflationist policy. See my “Arrogance or Intelligence” blog at https://www.greenpaperrevolution.com/post/education-investing-fiat-money-austrian-economics to better understand the Fed’s predictable path forward. For every Fed warning about asset bubbles or talk of sustainable tightening of monetary policy, there are orders of magnitude more statements about creating inflation and even overshooting the annual 2% price target. The dangerous inflation wolf has finally arrived exactly as the Fed gatekeepers intended and welcomed.
When reading the boy who cried wolf fable, one can only think of a naïve boy that did not fully understand the implications of his words. The boy had no bad intentions nor did he mean any harm to the flock that he was supposed to be protecting. Perhaps he was looking for attention from the elders or was just bored. The young boy learned a valuable life lesson. But what of grown men that very deliberately deceive others to advance their private agendas? When false information is disseminated as red herrings to hide the truth, then one must begin to question that person’s morality. If others will knowingly be harmed by this person’s deceitful actions, then should they be considered immoral sinners? I believe so and they need help. The FOMC needs help and must immediately change their policies of dollar destruction to one of dollar preservation. Strong nations have strong currencies. The “Fed Listens” events that were initiated last year are such an ironic and outrageous public relations piece that I can barely contain my laughter and disappointment. There is global collusion among central bankers to inflate their currencies in relative unison. However, the day when the US dollar separates from the pack (to the downside) is not far away. The great American people do not deserve that horrific and avoidable outcome. The flock of sheep that the boy was there to protect did not deserve the outcome that they received either. I will restate my comment from the opening paragraph. I DO NOT BELIEVE ANY OF THE FEDERAL RESERVE BANK OFFICIALS AND NEITHER SHOULD YOU. The Fed is going to continue its multi-decade policy of inflation and reckless monetary policy despite all the soothing warnings and contradictions that they spew out. Check out the Green Paper Revolution motto at the top of the web page. It reads - Do not be Deceived, Bribed or Intimidated any longer!!
The early stages of the revolution have been to educate others about the truth and to identify what is most important to understand about fiat paper money. If the great American people do not understand the inevitable consequences of reckless inflation on our green paper currency, then our future generations will needlessly suffer. The second stage of the revolution is for the people to trust the right leaders and unite behind them. My hope is that all of you reading this blog will spread the word (and education) and unite behind the honest, moral and strong leaders that can truly change the course of America’s current path of moral and financial decay.
In keeping this blog short, I will defer the desired actions and vision for a later date. My hope is that Charles MacKay was correct when he quoted the following.
“Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, one by one.”
― Charles MacKay, Extraordinary Popular Delusions and the Madness of Crowds