The Real ‘Reset’ Is Coming ---- by Victor David Hansen

"The world and the United States are furious over hyperinflation that may soon exceed 10% per year. We will be lucky if it ends only in recession or stagflation, rather than a global depression."

While 10% annual would be terrible it's not "hyperinflation" and we aren't at 10% (yet).

Hyperinflation is something like 50% per month. It's extremely unlikely that the US Dollar will ever experience that.

The Fed knows how to break an inflation. They will choke off credit like Paul Volcker did, with interest rates spiking. But we also need a President not dedicated to choking off energy production or it may not work and the economy will remain stagnant and Americans will get much poorer.

“While 10% annual would be terrible it’s not “hyperinflation” and we aren’t at 10% (yet).
Hyperinflation is something like 50% per month. It’s extremely unlikely that the US Dollar will ever experience that.”

I agree with your definition of hyper-inflation. One of the main reasons The Fed has kept interest rates so low has been to enable the Federal Government to borrow at nearly zero interest rates. Meaning borrowing up the hilt for virtually free. As in getting free money. As in money growing on trees.

If The Fed is forced by worldwide markets to increase interest rates to where the FedGov has to borrow at 3-4-5%, this will make servicing the FedGov debt much more difficult.

The low short rates are ones that the Fed has some control over, but the longer ones are up to what bond buyers have been willing to pay. And for some reason big money has been willing to get very low yields for a long time.

This may be due to a savings glut from the likes of China. It could also be from foreign lenders choosing to be repaid in dollars which has allowed the Fed to increase the quantity of money without it showing up here as inflation until now. The dollars have been sponged up outside the US. These are just possibilities I’ve read of in recent years to explain the low rates despite the growing money supply.

When rates do rise it won’t hurt the government for any already issued debt. It will affect new debt issued by the Treasury. So rolling over maturing issues will be affected as well as any new debt if Congress increases the debt limit.

A very large portion of the debt is held by the Fed for monetary management and those interest payments all revert to the Treasury making them have zero effect.

We are still in an era of very low rates. All through the Reagan years IIRC they were never below 5%. The low rates really didn’t start until right after 9-11.

The Federal Reserve is a semi-make work program. Has a bloated bureaucracy that I am sure has a serious affirmative action hiring program. Compensation is much higher than in in the dreaded private sector.

To pay for this jive, The Federal Reserve does retain some of its earnings. My guess it retains 5-7%, the remainder of earnings are remitted to the Federal Government.

BTW I was listening to Glen Beck last night, for two minutes he was recommending the book, “The Creature From Jekyll Island”

“BTW I was listening to Glen Beck last night, for two minutes he was recommending the book, “The Creature From Jekyll Island”

Glenn Beck is attracted to conspiracy theories and G Edward Griffin certainly appeals to that itch. Jekyll Island apparently isn’t Griffin’s only foray into conspiracy tales. People love them. They are way more entertaining than actual dull history.

The man primarily responsible for the creation of the Fed was the same man who acted as America’s defacto central bank with all of the power that it conferred. And he was accountable to no one. He could have kept that power to himself and continued to have Presidents come to him hat in hand and plead with him to save America’s financial system from collapse.

He did that until the Panic of 1907 and then warned that America’s economy was getting far too big for his bank and his friend’s banks to rescue. America was the only major economy to lack a central bank. It needed a lender of last resort. He pushed the Aldrich-Vreeland Act of 1908 that created the National Monetary Commission. The Commission studied the banking systems in other advanced economies and issued reports suggesting how we could modernize ours. The result eventually led to the 1913 Federal Reserve Act.

It was fortuitous timing. The eruption of World War One in 1914 started another major panic. Europe began withdrawing huge quantities of gold from the United States which under the gold standard has a drastic deflationary effect.

Woodrow Wilson’s Secretary of the Treasury William McAdoo was able to use the Fed to halt this gold drain. Like Alexander Hamilton he was a bit of a financial genius and his action is what ultimately turned the previously second rate US dollar into the world’s premier currency displacing the British Pound.

The man who voluntarily sought to replace himself as America’s central bank was JP Morgan Sr.

You have posted a good history lesson of the Fed. Only problem is that the Fed's mission to stop or moderate bank panics is a fraction of what they do these days/ If this is all the Fed does, then this would be fine by me.

Glenn Beck is attracted to conspiracy theories, and G Edward Griffin certainly appeals to that itch. Jekyll Island apparently isn’t Griffin’s only foray into conspiracy tales. People love them. They are way more entertaining than actual dull history.

I read the book 25 years ago and it not conspiracy theory. It is history as G Edward Griffin sees it, with a lot of collusion and conniving by key participants to get the Federal Reserve act passed. At Amazon I can see Griffin has books with his alternative cancer treatments, such as laetrile. I suppose those books have conspiracy mongering. For me the proof is in the pudding. He is 90 years old so his alt. health theories have panned out for him.

Similar to Linus Pauling who said to take 6 grams of vitamin C daily with lysine, lived to 92.

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