The Fed has now printed new money and bought more assets than anytime in history. They do this to control interest rates and loan money to the USA.

Via the Federal Reserve’s website,

“Similarly, the Federal Reserve can increase liquidity by buying government bonds, decreasing the federal funds rate because banks have excess liquidity for trade.”[1]

The federal funds rate is the interest that big banks charge each other for an overnight loan it influences all other interest rates.[2]

In September 2019, the Federal Reserve began buying assets again after selling in 2018. When they sold assets, interest rates were rising.

Again, via the Fed,

“The Federal Open Market Committee (FOMC) meets eight times a year to determine the federal funds target rate. As previously stated, this rate influences the effective federal funds rate through open market operations or by buying and selling of government bonds (government debt).(2) More specifically, the Federal Reserve decreases liquidity by selling government bonds, thereby raising the federal funds rate because banks have less liquidity to trade with other banks.”[3]

However, rising interest rates caused the most indebted country to need more money to pay their bills, or we would default.

Fed Chairman Jerome Powell even said so in 2012,

“I think we are actually at a point of encouraging risk-taking, and that should give us pause. Investors really do understand now that we will be there to prevent serious losses. It is not that it is easy for them to make money but that they have every incentive to take more risk, and they are doing so. Meanwhile, we look like we are blowing a fixed-income duration bubble right across the credit spectrum that will result in big losses when rates come up down the road. You can almost say that that is our strategy.” Oct 2012 Federal Open Market Committee Meeting.[4]

So now they are printing as much money as is needed to buy the debt of these bankrupt united States at low interest rates.[5]

“The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default.” -Former Federal Reserve Chairman Alan Greenspan, Meet the Press, August 7, 2011.

The Fed is loaning the government money so that the government can bail out our businesses while we are quarantined.

They are going to send us $1200 cheques sourced by loans made from the Fed who created the money out of thing air and we have to rise taxes to pay it back.[6]

The USA is $23 trillion in debt.

That is $73,000 per person and $190,000 per taxpayer.[7] We can’t ever pay it off without the Fed buying it.

“We can guarantee cash benefits as far out and at whatever size you like, but we cannot guarantee their purchasing power.” -Fed Chairman Alan Greenspan, US Senate Committee on Banking, Housing and Urban Affairs, Feb 16, 2005.

However, the consequence will be the end of the dollar standard and a return to the gold standard as debt and money is revalued against gold.

The wealth that past generations has saved has been consumed. We have eaten our seed corn.

[1] https://fred.stlouisfed.org/series/fedfunds

[2]https://www.hamiltonmobley.com/blog/iorr-ioer-and-ffr

[3] https://fred.stlouisfed.org/series/fedfunds

[4]https://www.federalreserve.gov/monetarypolicy/files/FOMC20121024meeting.pdf Page 193

[5]https://www.hamiltonmobley.com/blog/10z30r9kwa8c5i7d9t8heuhgxbzycd

[6]https://www.hamiltonmobley.com/blog/gd9ivoawqvp3xnor5ydwscgnunajef

[7] https://www.usdebtclock.org/