Post # 113
A Ponzi scheme is an investment fraud that pays existing investors with funds collected from new investors. The US government, the Federal Reserve, and corporate executives have victimized us into a giant Ponzi scheme. The government cannot create money, so it sells bonds (securities) to the Federal Reserve, and the Fed creates money to buy the securities. The Fed is a company owned by private investors. The Fed is unconstitutional because Article 1, Section 8 of the Constitution states that Congress shall have the power to coin (create) money and regulate the value thereof.
In 2020, the Federal Government had a deficit of $3.13 trillion. This level of borrowing is only possible with low-interest rates. America’s Achilles Heel is an increase in interest rates. In 1971 the prime interest rate hit a high of 21 percent! What would happen if the government had to pay 21 percent on its current 30 trillion dollar debt?! The low-interest rates have benefited corporate investors by allowing them to borrow a vast amount of money, over a trillion dollars in 2020, to invest in their company’s stock. This stock purchase raises the market price, making them rich via their bonuses. Unlike in Europe, the system rewards executives when their stock price increases. For a more in-depth explanation, see Fiat Money #56, The Cantillion Effect #59, and Who is Jerome Powel? #83.
We are victims of a Ponzi scheme because the government has not invested the borrowed money in economic growth that benefits the general economy. The problem is that we cannot taper a Ponzi scheme. Once the government borrows less than in the previous cycle, the house of cards will come tumbling down. Debt supports this house of cards instead of economic growth. All this borrowing and spending causes inflation. Inflation is caused by too much money chasing too few goods. What has happened to your grocery bill? Are you paying more for gasoline than a year ago? Are we facing hyperinflation?! You can’t trust the official narrative to reveal the truth. All we get from the mainline news is smoke and mirrors. The powers that be are too busy crafting dishonest narratives that support their agenda, a plan that favors more borrowing and spending, but they cannot hide the truth forever, and we will pay the piper someday.