Never go full Weimar: America’s monetary base has grown 6 times larger since 2008
A lot of people have been waiting for a meltdown of America’s financial system, but the truth is that it is already in the process of melting down. As you will see below, the size of the monetary base in the United States has gotten more than six times larger since 2008. If we continue down this road, it won’t be too long before we start looking like Germany during the Weimar Republic. But if we stop creating money at a feverish rate, we won’t be able to service our debts and we will plunge into a very deep economic depression. Those that run things desperately want to avoid short-term economic pain, and so they just continue to take the easy way out. Unfortunately, taking the easy way out time after time will only lead to heartache.
Instead of examining M1 or M2 as many others tend to do, in this article I am going to look at our monetary base. If you are not familiar with that term, the following is how Investopedia defines it…
The monetary base is the total amount of a currency in circulation or held in reserves. Money in circulation is anything that is held and used by the general public while reserves refer to commercial bank deposits and any money held in reserves by these institutions at the central bank.
For most of our history, the growth of our monetary base was very stable.
But then the financial crisis of 2008 arrived, and it started growing at an exponential rate.
As you can see from the chart below, the size of the monetary base went from less than a trillion dollars in 2008 to nearly six trillion dollars today…
There tends to be a lag between when the monetary base rises and when we see prices increase throughout the economy.
For example, the dramatic spike in the monetary base that we witnessed in 2020 did not immediately cause prices to soar.
But in 2021 and 2022 we certainly felt the pain.
Throughout 2022, the size of the monetary base was actually falling as the Federal Reserve attempted to battle inflation, and that resulted in prices moderating to a certain extent in 2023.
Unfortunately, the size of the monetary base started to go back up in early 2023, and now it is rising very sharply once again.
That is definitely not good news for U.S. consumers in 2024 and beyond.
We certainly don’t need more inflation, because just about everything has become painfully expensive these days. The following comes from CNN…
From the historically unaffordable housing market and budget-breaking day care rates to high car prices, the United States has a cost of living problem many years in the making.
Parents of young children are making difficult choices to afford child care — or they’re opting to evade it by dropping out of the workforce altogether.
Parents are also struggling to buy bigger cars to haul around their growing families while simultaneously socking away some money in college savings plans.
For too many, the American Dream feels like an illusion.
So why don’t those in charge stop creating so much money?
Well, the truth is that if they stop we won’t be able to service our rapidly growing debts.
Today, U.S. consumers are 17 trillion dollars in debt, corporate debt is at the highest level ever, state and local governments are drowning in debt, and the federal government is 34 trillion dollars in debt.
At this point, many prominent voices are issuing ominous warnings about what will happen if we do not get our debt spiral under control…
Since the beginning of the year an increasing cacophony of alarm bells has been ringing out: JPMorgan Chase CEO Jamie Dimon says there will be a market “rebellion” over the issue while Bank of America CEO Brian Moynihan says it’s time to stop “admiring” the problem and instead do something about it.
This fear is echoing outside of Wall Street, too. The Black Swan author Nassim Taleb says the economy is in a “death spiral,” while Fed Chairman Jerome Powell says it’s past time to have an “adult conversation” about fiscal responsibility.
They are right.
We are in a vehicle that seemingly has no brakes, and we are headed for disaster.
Of course our politicians will never stop borrowing and spending. They are completely and utterly addicted to debt, and they realize that the economy will collapse if they stop propping it up with trillions of borrowed dollars.
As Jim Quinn has aptly observed, it now “requires $1 trillion of new debt every 100 days to achieve nothing but remaining static economically”…
Now it requires $1 trillion of new debt every 100 days to achieve nothing but remaining static economically. The regime media pundits and the cabal on Wall Street tell us the economy is doing great. No recession in sight. All is well. The dumbed down and distracted ignorant masses don’t realize all the reported “economic growth” is “created” by the government, enabled by The Fed, spending billions on their wars in Ukraine and the Middle East, funneling the money into the Military Industrial Complex corporations; paying for the transportation, feeding, and housing of the illegal invading hordes; hiring more government drones to harass the citizenry, and desperately trying to prop up a corrupt tottering empire in its final death throes.
Anyone with even the slightest mathematical acumen knows increasing the national debt at a rate of $1 trillion every 100 days is a death wish. Why would those pulling the strings behind the scenes of this acceleration towards the cliff of national suicide be doing so at this point in time?
From the founding of our nation, it took more than 200 years before the U.S. was a trillion dollars in debt.
Now we are adding a trillion dollars to the national debt approximately every 100 days.
What we are witnessing is nothing short of insanity, and what our leaders are doing to future generations of Americans is also extremely immoral. In early America, Thomas Jefferson warned that government debt was a way that one generation could steal money from future generations on a massive scale…
The system of banking we have both equally and ever reprobated. I contemplate it as a blot left in all our constitutions, which, if not covered, will end in their destruction, which is already hit by the gamblers in corruption, and is sweeping away in its progress the fortunes and morals of our citizens. Funding I consider as limited, rightfully, to a redemption of the debt within the lives of a majority of the generation contracting it; every generation coming equally, by the laws of the Creator of the world, to the free possession of the earth he made for their subsistence, unincumbered by their predecessors, who, like them, were but tenants for life… And I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.
Our politicians have stolen tens of trillions of dollars from our children and our grandchildren.
What they have done to future generations of Americans is beyond criminal.
And now they have brought us to the brink of national financial suicide.
So enjoy the brief period of relative stability that we still have left, because the endgame is now upon us.
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