Officials at the Federal Reserve say they expect inflation to kick in “sometime in 2017,” and has already proposed a second rate hike in 2016, after we had gone more than a decade without a single one. CNBC, The Free Thought Project and several other news organizations have reported how “banks are preparing for global nuclear winter” and even the Rothchild’s agree we are “witnessing the greatest money experiment in history.”
So, what exactly does all of that actually mean? The Free Though Project reported how “The chaos in the market has major bank officials running for the hills. According to CNBC, European banks, in particular, have had a very tough six months as the shock and volatility around Brexit sent banking stocks south. Major European banks like Deutsche Bank and Credit Suisse saw their shares in free-fall after the referendum’s results were announced. In the U.K., RBS was the worst-hit, with its shares plunging by more than 30 percent since June 24.
On Sunday, speaking on the condition of anonymity due to the fact that revealing this information can get bankers killed, a source from a major investment bank told CNBC “that financial services firms have put together a strategy in place that takes into account the worst-case scenario that could happen by the end of this year.”
Certainly Sounds Bad, and Are You Afraid Yet?
The truth of the matter though, is that this isn’t a new issue, these are not new claims, and bankers have warned us about this, years on end. Remember famous pundit Glenn Beck? As far back as 2007, he was telling his viewers almost on a nightly basis how/why the global economy was failing. He was eventually fired from Fox News for being too extreme – even for them.
I have seen/read the type of article above more times than I can count over the last several years; articles about the end of the economy, stock markets collapsing and the dollar becoming worthless. In 2016, I have become numb to headlines and reports such as this, tending to brush them off as fear mongering conspiracies to keep people living in fear, but I also understand there are some very real problems going on here.
Despite the report above, you may or may not have heard over the course of the last 6 weeks, how Wall Street and the stock market have hit all-time record highs. This strange phenomenon, occurring since 2014, seems on the surface to contradict all other reports about the economy/dollar verging on collapse.
If Everything is so Bad and the Sky is Falling, Why is Wall Street Booming?
Since Obama first took office in 2008, the Federal Reserve has introduced over 4 trillion dollars of newly created money into the market. As this money is created in the form government bonds and deposited into banks to be loaned, this money is subject to fractional reserve banking laws. If you are not familiar these laws, banks are permitted to loan out up to ten times the amount of money they actually posses. This means if a bank owns 10$ they can legally loan out 100$; if banks’ have 4 trillion dollars, they can loan out 40 trillion dollars.
Do you see where this is going? With 4 trillion dollars having been artificially introduced into the economy, and up to 40 trillion dollars in potential new loans, of course monetary totals will soar with stocks reaching all time levels. This is not an indicator of a strong economy, rather, it is simply the result of unprecedented amounts of new money entering into the economic system.
The down side to this new money is, of course, inflation. Last December, the FED increased interest rates for the first time in nearly a decade, hinting at another rate increase in the near future – possibly September 2016. Prior to their last meeting July 26th, the FED also indicated how recent pressures in the United States to increase wages was putting pressure on the economic market – indubitably resulting in higher inflation.
For the time being, everything is remaining relatively stable, but this could dramatically change in the very near future – and no, this is not more conspiracy talk. Patrick Harker, President of the Federal Reserve Bank of Philadelphia, told Bloomberg News last month that the FED is planning “up to two additional rate hikes this year (2016) and that the funds rate will approach 3.0 percent by the end of 2018.” In addition to this, Harker notes how he expects inflation to kick in sometime next year in 2017 – after the national elections.
Remember, the stock market has regularly been hitting all time record highs dating back to 2014 – the latest news is nothing new. All of this is a result of the influx of newly created money by the federal reserve/bailouts/federal stimulus, and is not an indicator of economic prosperity.
In 2012, for the first time in history, our budget deficit surpassed our gross domestic product – reaching 101% of our GDP. Last month, the Congressional Budget Deficit forecasted our debt could inflate to 141% our GDP, if we remain on the same economic course. This number indicates annual spending/debt in relation to the amount of goods and services produced by our country over the same period. When debt to GDP is over 100%, this means our nation is producing more debt than assets.
The truth is, we are artificial printing endless amounts of money just to stave off economic collapse and stay afloat, as a country. Considering that the US dollar is the world’s reserve currency, nearly every other country in the world is co-dependant on the success of the US dollar. This also happens to be the reason many people believe that the dollar/global economy has not collapsed yet – or perhaps never will.