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QE3: More Inflation to Come?

October 7, 2012

By John K Rooney

Another round of electronic money printing by the Federal Reserve is at hand, but the patient has been stubbornly unresponsive.  Like a drug addict who needs meth to fly high and then narcotics to crash, the US economy has not known truly free markets for quite some time, with the exception of a menacing credit default swap market that threatens the entire system.

Is it not more preferable that money serve as a medium of exchange instead of being a dominating force behind a nation?  Unfortunately, it’s the Federal Reserve cartel and their associated international financiers who really hold the power, even the power over political puppets such as Obama and Obamney who serve the same globalist masters.  As early as 1910 representatives of top banking families, including Rothschild agents, secretly met at Jekyll Island, GA to hammer out a plan to establish a central bank in America.  This bank would control money and credit, but it had to have the appearance of being a government agency.  The creation of money would spring forth from debt and since 1913, the country’s debt has indeed grown enormously from the time the central bank was established.

“Give me control of a nation’s money supply and I care not who makes its laws,” said Mayer Amschel Rothschild many years ago.  The control over credit and money is ultimately control over a nation.  Even the Bible says the rich rule over the poor and the borrower is slave to the lender.  When bankers create money out of thin air as the Fed is doing through quantitative easing (QE3), they become the masters of the nation and establish a form of financial dictatorship.

According to Shadowstats, which uses a pre-1980 formula to measure inflation, the figure has been roughly 10% for each of the last two years as opposed to the benign 2-3% we’ve been told.  Have you noticed rising prices for meat, canned foods, paper, cars, tuition, gasoline, gold, health care, common stocks, bonds and other items? We are experiencing stagflation in which government sponsored spending is chasing a finite amount of goods and services, without a corresponding rise in production that normally keeps inflation in check.

Overall, bank reserves have been flooded with cash from previous quantitative easings (Fed money printing), however, weak demand for loans has kept the money supply from expanding.  Truly high inflation comes through massive loan creation (money creation) on a 9 to 1 basis off bank reserves.  This pyramiding of loans is based on the fractional reserve principle.  It is a gigantic flaw in our financial system that fuels widespread greed and malinvestment, which results in extreme economic cycles.  The “correction” phase of these cycles brings financial disaster to multitudes who, in turn, carry the burden to bailout the mega-banks.  Here is another interesting thought: as loans are paid off, money is extracted from the money supply. Consequently, Bernanke may actually be forced to patch the corrupt, fiat money system by printing more money since tight underwriting and low loan demand have reduced the creation of new money that would offset retiring loans.  All of this tampering would not be necessary if we had a simple gold based system.

Is hyperinflation around the corner?  Maybe.  As long as reserves lie dormant in bank vaults inflation should not be a huge problem, though all inflation can be viewed as a stealth tax. Banks now borrow at 0%, sit back and collect bond interest basically for free.  How would you like a free ride like that?  However, once banks loosen up on loan underwriting and demand returns for borrowing, look out!  We may be in for skyrocketing prices and more turmoil ahead.  Here are solutions.  The private Federal Reserve Bank is a socialist system of top down control.  It creates crises, is unconstitutional and it should be abolished.  We also need to return to the gold/silver standard as established by America’s founders.

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