The Reckless Fed and Runaway Inflation

Sometimes, I really do feel that I am going insane.

The Federal Reserve is considering dropping the prime rate from 1% to as low as 0.5% (which would match the all-time low record) or as low as 0.25% (which would be a new record).

I ask: Is Bernanke really that insane/stupid, or is something else at work here?

The financial crisis we are in today is largely due to easy Fed monetary policy over the last two decades, and yet Bernanke, supposedly an expert on the Great Depression, continues to go further down the same path that got us here. The Federal Reserve has already made $2 trillion in loans, backed by taxpayers, and refuse to release information on these massive loans. We have the Treasury Secretary bailing out financial institutions, and the Big Three Auto Makers coming to Washington in hybrid vehicles begging for taxpayer money. We have a $10 trillion US government debt, and close to $50 trillion in unfunded liabilities.

Do these numbers mean anything to anyone?

The "wise" leaders in government feel the only way to get the economy going is to jump start what got it into trouble in the first place: people buying things they don't need with money they don't have. DEBT.

The financial bailout package was not enough to convince banks to begin loaning money again and get the credit flowing into the economy. They are either hoarding the money or buying up smaller banks and consolidating their power. They also are not loaning money to business because they do not know whether these companies are in trouble, are going to receive a temporary lifeline of government bailout money, or if they are actually good credit risks.

So, today, the Fed thinks that if they just open up the money supply a bit more, the banks will finally start loaning the money. This is very dangerous for two reasons:

1.) The cheaper US money becomes, the more that overseas countries that own US dollars may decide they are no longer worth it and will dump them into the system. The dollar crashes, and we have a hyperinflationary cycle as the Weimar Republic had prior to the rise of that pesky leader Adolf Hitler.
2.) The financial instutions hoarding their money finally do release it into the system, and we have massive inflation, or at worst hyperinflation (see #1 above).

Surely Bernanke knows this. Is he really playing Russian Roulette with the US economy, or is something else at work here?

Does he, and others in the US government, know that we have been living beyond our means for some time now, and we have been indulging ourselves in Utopian fantasies of social programs (thanks Boomers) for so long that the massive amount of debt will never be able to be repayed. And rather than saddle our children and grandchildren with the debt, and create generations of slaves and indentured servants, they are purposefully seeking to destroy the value of the US dollar, and thereby essentially wiping out our national debt and unfunded entitlement obligations. Reboot. Start over. Wipe the slate clean. The dollar is worthless, and so our debt is worthless, we pay it off with paper money no more valuable than Monopoly cash, and start over.

Of course, what rises from the ashes, given the Nation's taste for socialism of late, could be quite frightening...