Dr. Ron Paul
W
CLICK HERE TO READ THE WEB VERSION
hen the New York Federal Reserve began pumping billions of dollars a day into the repurchasing – or “repo” – markets (the market banks use to make short-term loans to each other) in September, they said this would only be necessary for a few weeks. Yet, last week, almost two months after the Fed’s initial intervention, the New York Federal Reserve pumped $62.5 billion into the repo market. The New York Fed continues these emergency interventions to ensure “cash shortages” among banks don’t ever again cause interest rates for overnight loans to rise to over 10%, well above the Fed’s target rate. The Federal Reserve’s bailout operations have increased its balance sheet by over $200 billion since September. Investment advisor Michael Pento describes the Fed’s recent actions as “QE [quantitative easing] on steroids.” One cause of the repo market’s sudden cash shortage was the large amount of debt instruments issued by the Treasury Department in late summer and early fall. Banks used resources they would normally devote to private sector lending and overnight
loans to purchase these Treasury securities. This scenario will likely keep recurring as the Treasury Department will have to continue issuing new debt instruments to finance continuing increases in government spending. Even though the federal deficit is already over $1 trillion (and growing), President Donald Trump and Congress have no interest in cutting spending, especially in an election year. Should he win reelection, President Trump is unlikely to reverse course and champion fiscal restraint. Instead, he will likely take his victory as a sign that the people support big federal budgets and huge deficits. None of the leading Democratic candidates are even pretending to care about the deficit. Instead they are proposing to increase spending by trillions on new government programs. The only way to avoid this is for those of us who know the truth to spread the message of, and grow the movement for, peace, free markets, limited government, and sound money.
American Consequences
61
Made with FlippingBook HTML5