Like the three bears the Federal Reserve has three tools for fighting inflation. The one that’s too weak is the Federal Overnight Bank Fund Rate that gives very short term (one day) loans to banks needing to shore up their reserves overnight to meet deposit insurance requirements. The one that’s too strong is the reserve requirement banks must hold from deposits. A slight change up or down has a huge ripple effect on the money banks have to reload from each deposit. The one that’s just right, the Federal Funds Rate (FFR) is set by the Feds buying and selling government debt, called the Open Market Operations (OMO).
This aspect is so critical to the Federal Reserve’s inflation fighting mission that it has its own high-powered committee, The Federal Open Market Committee (FOMC), to set interest rates for the nation.
With that review, what if I told you that the federal reserve may be toothless in the face of hyper-inflation and may only be able to raise interest rates through the OMO one percent? Here
Those who lived through the late 70s remember hyper-inflation and the extreme measures then Chairman of the Federal Reserve, Paul Volker took to put the brakes on run away price increases. The Fed drove the prime lending rate up to 21% and slamming the brakes on the economy for a few quarters.
Now imagine what may have to be done today if the Fed can’t act to raise interest rates more than 1% due to being caught in a trap of its own quantitative easing (QE) ways. The Fed’s ability to put the brakes on inflation is expressed in the article as MTE = Monetary Tightening to Easing Ratio. – Dr. Tar
There’s nothing left after the sub-prime mortgage debacle.
Dissolve the Fed?
Audit the Fed.
The only thing they can do is cause inflation.
Interest rates should be double digits by now!
Fuck Greenspan
Fuck MMT (modern day monetary theory)
“Is The Fed Nearly Helpless to Do Anything About Hyperinflation?”
The Feds are helpless in many departments – but it’s by design. Get too big and powerful, who is going to stop them? Who? Trump isn’t going to stop it, they stopped him. Tell me again how we’re going to stop it! It’s by design, the end is going to be Hell on steroids.
Crash the economy, cause uprising, declare marshal law.
Whats to understand.
We know they don’t care if a couple 100,000 people die, already proved it.
Hyper-inflation destabilizes nations. Using reserve requirements to fight it would drastically shrink the money that’s sloshing around in our economy right now, but it would also put a screeching halt to what little economic recover we might have.
How does one protect their lifesavings from stagflation, which is what’s coming to us sooner then anyone in charge is willing to admit.
They aren’t “helpless” they are the CAUSE.
$23 Trillion in debt and $220 Trillion in unfunded liabilities and a budget deficit of $1/2 Trillion?
The GDP is ~$22 Trillion.
Do the math.
If the Gov’t taxed EVERY SINGLE PENNY earned by EVERY MAN, WOMAN, AND CHILD in the United States it would take 12 years (assuming no interest) to pay that shit off.
It simply can’t be done – if the gov’t took everything, every one would starve to death before the end of first year – but – BUT – inflation makes it possible.
With every man, woman, and child making $1 Billion per year (exaggerated to make a point) the gov’t could just seize HALF through taxation and the debt would be paid off in ONE year with $665 left over!
It’s like free money!
AND THIS is why the pols are stealing everything they can steal (plundering the Treasury) – as the inflation increases the value of everything decreases – so if they’ve stolen more than the decrease represents, they come out ahead (not that stealing isn’t and end to itself – many are simply greedy).
I’m sure Uncle Al has a better grasp than I – this is the Plumber’s version.
mortem tyrannis
izlamo delenda est …
The value of money decreases, not everything!
DUH!
mortem tyrannis
izlamo delenda est …
If you insist that you’re gonna’ keep doin’, what you bin doin’, “hyper”-inflation matters. To you.
And you won’t be missed.
Taking their printing presses would be a good place to start.
Has anyone noticed that Social Security payments are running 3-5 days late? Are they banking a little extra interest at the expense of recipients?
I’m no economist, but I know that the main cause of this recent bump in inflation is the CV stimulus payments sent to every man, woman and child in this country (and others). The more money in circulation cheapens its value – thus inflation. I have no idea what could reverse this, or cause deflation, but logically it would be to take the money out of circulation. Taxation is the only way to remove money from people so this could get interesting.
When I was employed first 2 letters after name were Econ degree
Short answer NO!
But the Fed did not want to bring attention to a serious problem 8 months ago! So Powell lied! Said it was “transitory”! After 8 months of living standard destroying inflation; it is clear to all (But Bush Republicans still deny this!) it never was “transitory”!.
To control inflation after telling lies for 8 months is almost impossible. But had Powell not lied and undone QE 7/21 there would be not inflation in 4/22!
I was a CFO when Carter inflation was rampant. I bought “Jumbo CDs” paying 24% when Ronny got elected. It was Ronny who killed the inflation dragon NOT THE POWELL LIKE VOLKER! That statement is a Ronny bashing liberal lie!
When Ronny took over CPI was 11.9%. A year later it was only 8.09%. By 1/84 it was 3.9%.
when Paul took over! Ronny killed it!
High inflation reduces the monetary value of debt.
They’re stealing from us faster than ever.
It’s not rocket science. And it’s what the U.S. Gov and the FED want.
We are but pawns – so we believe.
Inflation??
No, they’re just indignant about those that even talk about inflation during a commie, democrat dictatorship.
Besides, the lowest on the totem pole are unaffected.
Edit:
Inflation??
No, they’re just indignant about those that even talk about inflation during a commie, democrat dictatorship.
Besides, the lowest on the totem pole are unaffected, along with the elites.
restore us to constitutiona money – gold & silver!!!
constitutional, that is!
The US dollar was the global fiat currency for decades because it was backed up by oil. Now, the US government is openly pushing to ban fossil fuels, thereby undermining its own currency.
If they raise interest rates that makes the national debt go up. IMHO that is why they don’t raise interest rates, it’s all political.
And it’s all about destroying this country.
@ mickey moussaoui APRIL 8, 2022 AT 6:51 PM
I’m sorry that your deserved payments are coming late, if that is where your information is from. That is B.S., in my mind, you should be able to take the money that you were forced to hand over to the government, so they could use it for whatever they wanted, despite the “lockbox” whenever you want. As a Lump sum if you want. No taxes either.
I’m a few years away from getting my money back, but I’ve known since I was in my teen that I would be lucky to get any.
And they also keep trying to take what we have saved on our own, for our own good of course.
I don’t know what to do, but I wish you well.
THIS. IS. ALL. INTENTIONAL.
Why would they do anything ‘about ‘ it?
The FED can do everything about it
But the FED is utterly corrupt
I wish someone could explain how silver and gold backed money even works? If the supply of gold and silver is fixed (unless there is more mining done somewhere) and the population keeps increasing, won’t we all get poorer as time goes on?
@oldvet50 April 9, 2022 at 8:55 am
You’re using the banksters’ deliberate conflation of a means of exchange, and a store of value.
As a means of exchange, “money” simplifies the mental gymnastics of “trade”. Instead of trying to guess how many eggs should I accept for this loaf of bread (especially if I’ve no use for eggs), and trying to figure out who will take eggs for something that I can use, and on (the alleged “failure” of pure barter)… I set the “price” of my bread to some (mostly universal) thing (silver or gold, kerosene or salt). You set the price of your eggs to the same, physical, thing. And if we both “know somebody” who deals in that thing, we have them settle both our accounts. If it’s convenient enough to carry (and trust), we can even settle between ourselves. I don’t need to take possession of your eggs. You don’t even need to sell them, right now. And neither of us has to guess what is “this” worth, to the person on the other side of the counter, right now, this time.
It is necessary, though, for whatever real thing we peg our prices to, to be physically stable (enough), to not change before our accounts are settled. Grapes, that become raisins, that become dust… don’t work well. And therein lies the, eternal, banksters’ grift. A long term, shelf stable, commodity is chosen. Silver and gold have always been popular. Others have been used. But the con always runs the same: As a “convenience” the physical exchange “commodity” shouldn’t be carried around. And the wealthy don’t want to keep vast quantities of it, at home. So the (once it starts, the ruler always takes a cut to limit it to one) “trusted” party creates tokens that represent the physical commodity. And must be less valuable than what’s “written” on the front. Otherwise, they’d be converted to the real thing, at a profit. Now you believe, that you have a claim (like in a locked box), to the amount of commodity written on the tokens you hold. As long as you hold them. A convenient, though always false, store of value. Stored by somebody else. Somewhere else. Out of your reach. You already know how that ends.
Commodity backed “tokens” are not a store of value. If used, prices change. But, if anybody can store “it”, then anybody can be “trusted”. Or distrusted. There is no, long term, option to float more tokens than commodity in the actual “box”. Or mix more filler in the new tokens, while claiming the same face value. Because whoever tries, becomes distrusted. But trade goes on, because there are so many other, trusted options. For the exact same commodity. But that is not what “hard money” grifters want to sell you.