{"id":168101,"date":"2020-04-05T05:48:26","date_gmt":"2020-04-05T09:48:26","guid":{"rendered":"https:\/\/www.countingpips.com\/?p=168101"},"modified":"2020-04-04T13:49:11","modified_gmt":"2020-04-04T17:49:11","slug":"crisis-exposes-devastating-result-of-ongoing-fed-policy","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2020\/04\/crisis-exposes-devastating-result-of-ongoing-fed-policy\/","title":{"rendered":"Crisis Exposes Devastating Result of Ongoing Fed Policy"},"content":{"rendered":"
April 5, 2020<\/div>
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By Money Metals News Service<\/b><\/p>\n

Two weeks ago, during a March 17 address to the nation in response to the COVID-19 outbreak, President Donald Trump asked that Americans work from home, postpone unnecessary travel, and limit social gatherings to no more than 10 people.<\/p>\n

And last week, on March 27, Trump signed a stimulus package of over $2 trillion dollars to provide relief to an economy on the precipice of collapse.<\/p>\n

The aid package includes handouts and loans to individuals, small businesses, and other distressed industries.<\/p>\n

Despite Trump\u2019s \u201chaving created the greatest Economy in the history of our Country,\u201d when the markets tanked, massive and immediate government intervention was the only thing left to forestall a total collapse.<\/p>\n

So why can\u2019t greatest economy in the world can\u2019t handle a temporary shock without needing trillions of dollars injected to stay afloat?<\/p>

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The Federal Reserve and its vicious and ongoing war on savers are to blame.<\/p>\n

Using the Federal Reserve Note \u2013 commonly (but incorrectly) referred to as the dollar \u2013 introduces a dilemma. Because of inflationary monetary policy, Americans have long been forced to select among three undesirable options:<\/p>\n

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A) Save<\/u>. Hold Federal Reserve Notes and be guaranteed at least 2% in purchasing power every single year.<\/p>\n

B) Consume<\/u>. Spend Federal Reserve Notes on immediate goods and services to get the most out of current purchasing power.<\/p>\n

C) Speculate<\/u>. Try to beat the Fed\u2019s deliberate inflation, seeking a higher return by investing in complicated and unstable asset markets.<\/p>\n<\/div>\n

With businesses and Americans defaulting on their rent and other obligations only days into the collapse, the problem is clear: Few have any savings\u2026 and why should they when saving their money at negative real rates of return has been a sucker\u2019s game?<\/p>\n

Lack of sound money, or money that doesn\u2019t maintain its purchasing power over time, has discouraged savings while encouraging debt-financed consumption.<\/p>\n

\u201cFew have any savings\u2026 and why should they when saving their money at negative real rates of return has been a sucker\u2019s game?\u201d<\/p>\n

Tweet This<\/a> <\/i><\/p>\n<\/blockquote>\n

American businesses and individuals are so overleveraged that once their income goes away, even briefly, they are too often left with nothing.<\/p>\n

Fiat money is especially pernicious in the way it harms its users. To some, small 2% losses can go easily unnoticed, year to year. Over 100 years, the loss has been well over 97%.<\/p>\n

And who can save for emergencies when you\u2019re being forced to work and spend more \u2013 simply to maintain the same quality of life?<\/p>\n

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\"Consumer<\/p>\n

Over 100 years, the Federal Reserve has destroyed more than 97% of our currency\u2019s purchasing power.<\/em><\/strong><\/p>\n<\/div>\n

With the Fed slashing short-term rates to zero, the US Federal Reserve Note has been further destroyed as a method of preserving savings. (And negative nominal interest rates could be coming next.)<\/p>\n

Inflationary economic policy, absent the guardrails of sound money, has created a situation with an obvious and deadly conclusion: that many Americans lack savings to protect themselves against downturns.<\/p>\n

This situation isn\u2019t necessarily the fault of the people, but rather the fault of a system in which discouraging and punishing savers is a crucial tenet of the entire framework.<\/p>\n

The Federal Reserve, the U.S. Treasury, and the White House are trying to reassure the public that everything is \u201cunder control,\u201d that \u201cthe U.S. economy\u2019s fundamentals are still strong,\u201d and that the economy will skyrocket once COVID-19 is taken care of. What if they\u2019re wrong?<\/p>\n

Maybe the greatest monetary experiment in history is coming to an end. Maybe sound money can still save the day, but we must not waste any more time in restoring it.<\/p>\n

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The Money Metals News Service provides market news and crisp commentary for investors following the precious metals markets.<\/p>\n","protected":false},"excerpt":{"rendered":"

By Money Metals News Service Two weeks ago, during a March 17 address to the nation in response to the COVID-19 outbreak, President Donald Trump asked that Americans work from home, postpone unnecessary travel, and limit social gatherings to no more than 10 people. And last week, on March 27, Trump signed a stimulus package […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-168101","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/168101","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=168101"}],"version-history":[{"count":2,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/168101\/revisions"}],"predecessor-version":[{"id":168160,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/168101\/revisions\/168160"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=168101"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=168101"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=168101"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}