Double Their Money

What Happens When The Feds Really Crank Up the Printing Presses

Bill Bonner, reckoning today from Poitou, France...

Last week, we looked backwards at the Year That Wasn’t.

That is, we read the stories the press didn’t write… and asked the questions the media declined to pose. Those unasked questions would have called into question the elite agenda, much as if St. Agnes had wondered whether chastity was such a good thing.

This week, we look ahead… at the New Year… and what it is likely to bring.

Not that we know any more than you do. None of us ever gets to read tomorrow’s bestsellers before they are written.

That said, we think we can anticipate the spin the press will put on the news. As you know, the press no longer attempts to report the objective facts. Now it is a mouthpiece for The Establishment… along with universities, Congress, the White House, Democrats and Republicans, Wall Street and the military/industrial/surveillance/medical/welfare complex.  

It shills for the elite deciders, and it decides what you ought to read and what you ought to think about it.

Fallacies and Fantasies

This could be an important insight. Because it may give us a little hint of how things might go in 2022… and beyond.

We ended last year looking back at the elite’s major themes and fantasies:

• That the world’s temperature needs to be controlled and that it can be done by reducing C02 emissions.
  

• That Black people in America have less money, get more Covid and commit more crimes because White people are mean to them.
  

• That the war against the Covid can be won with masks, shutdowns and vaccines.

• That any problem or crisis can be met with more action by the feds.
    

• That, in the absence of tax revenues or available credit to pay for it, the Fed can simply print up the extra needed cash.

Each of these agenda items, not coincidentally, involves giving the elite more money to spend. And giving the deciders more things to decide. 

Our attention, naturally, falls on these last two items. Money is our beat. And we suspect that money – or rather, fake money – is already the leading cause of America’s decline. But we’ll come back to that. 

Today, we are just trying to use this long pole – the elite’s prejudices and preferences – to vault our way into the future.

While we have no idea what new crisis or new emergency will emerge, we are almost sure of this: one will. And it will lead to more policies and programs designed to fix it.  

It is very likely, for example, that before the year is over the stock market will take a tumble. Stock prices do not go up forever.  Which means, they have to go down sometime. By almost all measures, stocks are as high or higher than they’ve ever been. Typically, when they reach such tippy-top heights, a slip-up usually takes them down in a hurry.   

Following The Money

Most of America’s stocks are owned by the top 10% of the population (aka ‘the elite’). And among these rich people, stock market wealth is concentrated in the upper 1%. These people, according to Wolf Richter, gained about $10 trillion over the last two years. Naturally, they have a keen interest in making sure that nothing rocks this boat!

So, in the event of a selloff in the stock market, we can expect the full fury of The Establishment brought to bear in favor of a rescue. The press will dutifully blame Republicans (and Democrat Joe Manchin) for blocking the Build Back Better Boondoggle… they will blame Republicans, generally, for gumming up the spending machine… and the Fed particularly for even hinting that it might someday take its fat foot off the pedal.

All of the great and the good will howl for relief… for more spending… for bigger deficits… and for stimmies up the gazoo. These can only be provided by printing more money. And this, once the initial shock of declining prices and the Ghost of the Great Depression have receded, will begin a new phase of higher consumer prices.

The higher prices will then be blamed on greedy corporations, classic theater for which several members of Congress are currently rehearsing. The New York Times reports:

Inflation remains rapid as the economy enters 2022, and Democrats have begun pointing to a new culprit for the high and lasting price increases: Greedy corporations.

Senator Sherrod Brown of Ohio, Senator Elizabeth Warren of Massachusetts, and the White House spokeswoman, Jen Psaki, have been among those pointing to excessive profits in certain industries as one thing jacking up costs for consumers. They don’t blame overall inflation on price-gouging businesses — but the implication is that higher prices are partly the product of corporate opportunism.

So what’s new? Every challenge this century – the dot.com crash of 2000… the World Trade Center attack of 2001… the housing finance meltdown of 2008… the Covid Crisis of 2020 – was met with more money printing, more each time.

Ms. Warren can blame greedy corporations all she wants. It won’t have any effect – zero – on inflation. Prices rise when the quantity of money… and/or the rate at which it changes hands – increases.  

Yes, the Fed will increase the quantity (Fed holdings are up nearly $8 trillion so far this century… with a 97% increase in the monetary base since 2019).

(Source: Board of Governors of the US Federal Reserve)

What’s new in 2022 is that the public is beginning to catch on. Seeing the presses running hot, investors, business, and households may be a little more eager to get rid of their new dollars, rather than hold onto them.  

Which is to say, for the first time in many years, the velocity of money may soon increase, too, along with the quantity.

Whether that will happen this year, or next, we don’t know. But Dear Readers won’t want to be the last to see it coming.  

Regards,

Bill Bonner