Why the Fed Can’t Normalize

19 Dec
Federal Reserve Eagle

Why the Fed Can’t Normalize

(They’re Between a Rock and a Hard Place)

It is better to not get started using addictive drugs.  Ask any addict.  Their trouble does not start when they try to stop.  The trouble starts when they start using.

It is the same with fiat (legalized counterfeiting, money-printing) monetary policies.  The trouble started when they started.  But the politicians want the cheap high, the something for nothing policies, and all the votes they can buy with promises of free stuff.  And, frankly, the authorities either are not smart enough or are not capable of stopping them.

That is why the Founders insisted on a sound – gold and silver-based – monetary system for the new Republic.  That is why they wrote gold and silver money into the Constitution.  So that the fiat, funny money addiction could not get started.  It was a good idea.  But one that would work only if the governing classes abided by their oath to support and defend the Constitution.  

They did not do that.

We do not know how many elected officials have betrayed that oath, but probably most of them.  Enough that Constitutional money was long ago replaced by the Federal Reserve.  The dollar was once as good as gold.  Now the dollar is as good as paper.

But enough lamenting what happened.  Now the nation, the elite, and the governing classes are addicted to fiat money.  And there is no easy way out.  Now they cannot quit distorting interest rates.  They cannot quit printing money.  They cannot let conditions return to normal.

We will let newsletter writer Bill Bonner explain why.  He points to a measure of the value of stocks compared to the nation’s total productivity, the Gross Domestic Product.  That measure shows that stocks are generally equal to about 80 percent of GDP.

But today that ratio is at an all-time high – 213 percent of GDP!  That is not just above the long-term average… It is in the stratosphere.

So, the Fed policy has driven inflation to its highest in 40 years.  Well, why doesn’t the Fed just stop and return to normal, sensible monetary practices”


If the monetary policy would go back to normal, stock prices would go back to normal, too…

With U.S. GDP at about $23 trillion right now, that would put the total value of all stocks – mostly owned by the top 10% of the population – at around $18.5 trillion… or about $30 trillion lower than they are today.

Almost all of the losses would come out of the pockets of the elite.

The elite would lose power, too. The ruling party would be voted out of office… And those who take over would be warned: Don’t cut off the money.

There is no easy way out.  No addict wants to suffer withdrawals. It would have been better not to start down the fiat money desolation road in the first place.  The Founders knew that.  They wanted a Constitutional government that would protect the money and your wealth with gold and silver.

But now you must protect your own wealth.  We are here to help.  Call or stop by and speak with a Republic Monetary Exchange gold and silver specialist.  Find out how to survive and prosper now that Washington’s fiat money addicts are between a rock and a hard spot.