We are experiencing inflation not seen since the 1970s and at a much greater speed. The Federal Reserve is responsible for the higher prices and they readily admit it. But if you’ve been listening to all of their speeches in via FOMC meetings or as they present information to Congress, you’ll know that they’ve been pushing for 2% inflation target for over 10 years and have not been able to achieve that target with their fake CPI numbers. That is large because the money they create out of thin air went straight to the big banks in the US and around the world. Those banks then turned around and put the money right back into their accounts at the Fed. Additionally, because the USD is the reserve currency around the world, the world needs dollars in order to transact with one another. This means keeping a lid on higher prices even though the Fed has been printing record amounts of money.
Since last year, the Fed has not only doubled its balance sheet, but the money they printed this time went directly into people’s hands. Now you have people who aren’t producing goods and services, chasing the goods and services that are actually produced. So less production from people not working means fewer goods and services. More currency in the hands of both productive and non-productive individuals means that higher prices need to happen due to higher demand. Additionally, we have record trade deficits for the US meaning the non-productive people of the US are buying up products with their reserve currency dollars while the world or mostly China is taking fake money in exchange for real goods. This has sped up the pace of the world trying to de-dollarize.
Fed said in 2008 when it began its QE program (qualitative easing which is money printing to buy treasuries and bonds) it said this was like putting training wheels on the economy. And when the economy runs smoothly they take the training wheels off. Only they put cartoon wheels on the economy to replace the real wheels that no longer exists. They should have let the real wheel deflate and let the free market fix it naturally. Yes, it would have been painful, but we would have re-built solid wheels back on the economy and gotten back on track.
There was a Steven Spielberg show in the ’80s called Amazing Stories. There was an episode where there was a young gunner on fighter airplane from the ’40s who was a cartoonist. They ended up in a heated battle and the turret under the plane where the gunner/cartoonist was encased in was damaged and the landing gear along with it. As they went to make an emergency landing, they knew they would crush the gunner/cartoonist who is trapped in the turret under the plane, but they had no choice. But this is where the Amazing Story came in… he began to draw the airplane and concentrated really hard, almost into a trance, and drew cartoon wheels on the landing gear. The real plane all of a sudden began to form cartoon wheels underneath. The crew safely landed the plane with cartoon wheels, pulled the gunner/cartoonist to safety. When they woke him, the cartoon wheels disappeared and the plane collapsed.
After over a decade of massive money printing as we are in the midst of QE4, fake cartoon wheels 4, the only way to move yourself to safety like the flight crew did in this Amazing Story is to grow your financial education. Follow us at Money-Act and we’ll help carry you to safety before these cartoon wheels disappear.