Anyone who has a basic understanding of economics knows that we can’t continue down the road that we are on. We can’t continue to flood the markets with cash and not expect a disaster to come at some point. We can’t continue to add more debt to a nation that has just hit $30 trillion in debt. But the situation is far worse than even what I was aware of and we are headed towards a disaster in the very near future.
Just the debt alone is enough to collapse this country within the next decade, but for this article I want of focus on the inflation tsunami that is about to hit and what exactly led us to this point.
What is inflation? To put it simply, inflation is too many dollars chasing too few goods. What causes inflation? The Federal Reserve flooding the markets with more and more dollars when there’s not enough goods to keep up with it. It’s not capitalism that is causing the price of everything that you buy to skyrocket. It’s the Fed inflating the money supply to where your dollar becomes worth less and less and then eventually worthless when that balloon finally pops.
What is the Fed? The Federal Reserve, despite the name, isn’t owned by the Federal government. It’s actually a collection of 12 private banks that are in bed with the federal government (a public-private partnership). They are very secretive about which banks are in these but it’s safe to say that the largest banks, Chase, Bank of America and Wells Fargo are among the 12.
The Fed’s job is to issue money, loan the government money and to fight inflation/deflation by adjusting the interest rates. Their job is to make sure that the economy stays stable and that the bubble doesn’t pop. How’d that work out in 2008?
In 2008, the Federal reserve told us that we need to spend $5 trillion to keep the banks afloat and prevent a complete depression. But what did that do? Sure it kept the economy afloat for awhile but that only prolonged the inevitable. You can’t keep pumping money into the system the way that we have.
Up until World War II the money supply was pretty stable. The supply of dollars on the market started rising right after World War II but then started rising quickly in the 1980s. Every time there’s a crash, the Federal Reserve seems to think the solution is to accelerate the amount of dollars that they pump into the market (1991, 2001, 2008).
What they told us
In October 2008, congress authorized $700 billion for TARP (Troubled Assets Relief Program). At the time it outraged many people that the government would spend $700 billion to bail out the banks. This was why the tea party was formed because at the time the government spending this amount of money was outrageous. Have you checked the price tag of the bills they now pass?
Then we were told that we needed to spend another $750 billion on infrastructure. And then the Federal Reserve said that we need to spend another $3.5 trillion to buy the bad assets from the bank. So in total we thought that $5 trillion was injected into the money supply. That alone is enough to cause serious consequences but little did we know it was much much worse.
What is the truth?
Due to a recent FOIA (Freedom of Information Act) request we know that everything we were told back in 2008 was a complete lie. We are just finding this out now because the government sealed the records for 12 years and then the Fed fought in court to continue to keep the records hidden. They never wanted us to find out what they were doing, which I would argue is criminal and maybe treasonous. Thanks to the FOIA request filed by the Levy Economics Institute we now know the truth.
So what did we actually spend on bailing out the economy? Well, Bank of America ended up getting $1.3 trillion. Merrill Lynch got $1.9 trillion. Morgan Stanley got $2.0 trillion. And Citi bank got $2.5 trillion. Just those 4 banks got more than the total amount that they claimed they spent in 2008-2010. But that’s even only the tip of the iceberg. Thanks to the FOIA request we now know that the total comes out to more than $29 trillion. And this was just between 2008 and 2010.
Before I continue it is important to note that these U.S. banks are part of the Federal Reserve so basically they just took the money out of one pocket and put it in the other. They gave themselves trillions of dollars.
Banks all over the world got part of that $29 trillion. Japan got $3.7 trillion of that. The United Kingdom got $1.5 trillion. And Germany got $1.4 trillion.
But it gets worse
Now let’s flash forward to September 2019, even before the pandemic. In September 2019, the Federal Reserve started loaning banks $500 billion per week. It started at $50 billion for 24 hours. Banks need a certain amount of money to open so what happens is they get loans from the Federal Reserve and then pay that back the next day. Then that changed to the banks being able to hold it for a week. That number eventually grew to $500 billion which banks were able to hold for up to 3 months. This was all a sign that something was seriously wrong but very few paid any attention to it.
So how much have we spent during COVID. Well they are claiming $10 trillion, but that doesn’t include the money that the Federal Reserve has pumped into the markets. We are going to have to wait two years to get the official numbers. Just taking the Federal Reserve at their word of lending $500 billion to the banks since April 2020, when the economy was shut down, we are now looking at 95 weeks as of late January. Even assuming that that $500 billion is accurate (which again they lied to us in 2008 so probably way off), we are now looking at more than $47 trillion being pumped into the markets, plus the $10 trillion that the federal government has claimed that they spent on COVID. Again, that is speculation because we won’t know the actual numbers for at least two years but judging by what they did during the 2008 crash, it’s likely much higher than that. I wouldn’t be surprised if we hit well over $100 trillion that was pumped into the market between 2020 and 2022.
The chart that I showed you before? That doesn’t included anything that we have done since 2019. We have pumped so much into the markets that that line almost shoots straight up. Want to know why inflation is beginning to skyrocket? That’s why. And the 7% inflation that they claim is happening (real inflation rate is actually 15% if you use the old way that we measured inflation) is nothing compared to the tsunami that is going to hit in the very near future.
What can you do?
The way countries go bankrupt is slowly by slowly and then it hits like a tsunami. We are beginning to feel the effects of what’s coming and that’s going to continue to grow and then all of a sudden it’s going to hit and then it’s going to be too late to prepare. That tsunami is coming in the near future. I’m not going to predict that it’s definitely going to hit in 2022 but it very well could.
You need to be doing whatever you can to prepare. That means investing in assets like gold and silver (I would recommend moving 10% of your assets in to precious metals).
That means making sure you are stocked up on things like food and other essential supplies. I would recommend trying to stock up for a year per person in your household and anyone else that will be dependent on you. If you can’t do a year, do as much as you can. If you haven’t done anything yet, make a list of any items that you use over the course of a month and then go out and every paycheck try to buy as much of the items on that list that you would need over the course of a month. When you hit a month, then increase until you have at least a year supply.
Buy things that you can trade like cigarettes and alcohol, even if you don’t smoke or drink. Those are going to have value when things collapse.
You need to be getting out of anything with a variable interest rate. The Federal Reserve is expected to begin to raise rates this spring. That means anything you own with a variable rate is going to start to rise. Get out of them before that happens.
If you can’t afford to take the above steps, you need to find a way before things get really bad. Downsize if you can. Cancel subscriptions. Don’t take that vacation to Disney this year so that you can use that money to prepare.
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