COVID economic hope: Printing money; COVID risk: Inflation

Hungary 1946 sweeping up hyperinflation currency notes

With the State of California and many other states restricting and/or locking down businesses, tax revenues are plummeting. The hope of many state and local governments in the US, as well as various national governments in Europe, is that more money will be printed up.

There has been a summit in the EU the last several days debating that.

In the US, the hope seems to be to get presumptive Democratic party presidential nominee Joe Biden elected so that there will be no interference in printing up money (mostly electronically) to bail out states and local governments for their economically disastrous decisions related to the novel coronavirus called COVID-19.

Many in the media and government act like printing up money is really the solution for the US economy.

But there is a risk: inflation.

Jim Rickards wrote the following:

Inflation

The White House is talking about “pent-up demand” as the economy reopens and consumers flock to stores and restaurants to make up for the lost spending during the March to July pandemic lockdown.

But, the data shows that the “pent-up demand” theory is just as much of a mirage as the green shoots we heard about a decade ago.

Many of the businesses that closed have failed in the meantime. They will never reopen and those lost jobs are never coming back. Even people who kept their jobs are not spending like it’s 2019, they’re saving at record levels.

Meanwhile, the “reopening” of the economy is now in doubt.

In some cities, the reopening was derailed by riots that left shopping districts in ruins. In other cities, the reopening was stopped in its tracks by new outbreaks of the virus that led to new lockdowns and strict application of rules on wearing masks and social distancing. …

Do you know what’s also not getting better anytime soon?

Debt and deficits.

From $1 Trillion to $5 Trillion

The annual deficit for Fiscal 2020 was originally forecast by the Congressional Budget Office at about $900 billion.

My estimate issued last year was that the 2020 deficit would be a bit over $1 trillion. But we were both wrong…

The pandemic came along the pandemic and new market panic in late winter and spring. The subsequent deficit spending and money printing broke all records.

Unlike the CBO’s estimate and my own forecast, the deficit this year will be at least $5 trillion. That means $5 trillion is the lowest number you can expect.

Meanwhile, the Fed’s money printing will more than double the size of its balance sheet from $3.8 trillion to $8 trillion or higher. …

With all this money creation, does this mean that inflation is finally on the way? …

When You’ll See Inflation

Inflation will come when people lose confidence in the dollar and suddenly dump dollars for any hard assets they can find.

Money velocity will accelerate but it won’t be into consumer goods. It’ll be into hard assets that hold their value over time, gold in particular.

In other words, the best leading indicator of inflation won’t be found in the grocery store or at the gas pump.

It’ll be found in the dollar price of gold.

Of course higher gold prices means higher consumer prices since higher gold prices mean a weaker dollar. More dollars will be required to buy the same amount of goods. 07/13/20 https://dailyreckoning.com/rickards-inflation/

Money and Markets posted the following from Bill Bonner, last July:

Bonner: Inflation Will Dominate the Next Five Years

July 18, 2019

YOUGHAL, IRELAND – This just in: The crooked tower of debt is growing taller and leaning further over.

The Global Debt Monitor reports:

Spurred by falling interest rates, global debt rose by a hefty $3 trillion in Q1 2019. At over $246 trillion, global debt is now just $2 trillion shy of the all-time high of Q1 2018.

Bigger Lies

We’ve seen that all forms of “stimulus” are mutant varieties of fraud. Whether we’re talking about unfunded tax cuts, bigger deficits, giveaway checks, quantitative easing (QE), zero interest-rate policy (ZIRP) or lower interest rates — they all work the same way.

That is, they all lie. They tell us that there is more demand (money) around than there really is. And they “work” by misleading people into doing things they shouldn’t do. Consumers overspend. Businesses overproduce. And investors buy stocks that are overpriced.

Depending on how it is delivered, this inflation of the money supply causes over- and adverse reactions that can easily be mistaken for real growth. More consumer spending. More business expansion. Higher stock prices.

But it is all a lie. And as the lying goes on, the economy gets more and more out of kilter … more and more dependent on inflation … And the feds need to tell bigger and bigger whoppers to keep it from collapsing.

Turning Point

This is the big financial story of our time: Inflate or Die. Either the feds continue to lie persuasively by inflating prices … or the truth comes out and the bubble deflates.

That’s why Fed Chief Jay Powell first “paused” his normalization program. …

And what are they going to do? Stump up the money with grace and good humor? Or try to find some new way to avoid the pain?

Looking ahead, the next five years are likely to be dominated by new and outrageous ways of inflating. https://moneyandmarkets.com/inflation-dominate-five-years/

Yes, programs like “quantitative easing” are lies.

Lying is a sin.

The Bible warns, “be sure your sin will find you out” (Numbers 32:23).

The problems will be worse for the USA than five years of inflation.

There is a serious cost to having an economy pumped up with so much “dross” money.

Will the USA pay its debts back in full or might inflation be the plan? Notice what Kevin Muir via The Macro Tourist blog wrote:

“It’s Foolish To Believe The Endgame Is Anything But Inflation…”

March 24, 2018

One of the greatest debates within the financial community centres around debt and its effect on inflation and economic prosperity. …

Creating debt is inflationary, while paying down debt is deflationary. That’s pretty basic. …

Therefore when the market pundits that I like to affectionately call deflationistas argue that this next chart is ultimately deflationary, I understand where they are coming from.

If you assume that this debt needs to be paid back, then it’s easy to understand their argument. When debt starts to contract and this chart heads lower, this will be deflationary. And if you assume that governments start to balance their books, then there is every reason to expect that future deflation is the worry, not inflation. After all, the money has already been spent. The inflation from that spending is already in the system.

I can already hear the deflationistas argument – over 100% of GDP is unsustainable therefore credit growth will at worst go sideways, but most likely actually contract in coming years.

Really? How about Japan? …h1

The same argument was made at the turn of the century when Japan was running a debt that was over 150% of GDP, yet they somehow managed to push that up another 80% to 230% without causing some sort of apocalyptic collapse.

Now before you send me an angry email about the moral irresponsibility of suggesting debt can go higher, save your clicks. I understand your argument. I am not interested in debating what should be done, but rather I am trying to determine what will be done. You might believe governments and Central Banks will gain religion and start conducting prudent and responsible policies. So be it. If you believe that, then by all means – load up on long-dated sovereign bonds as they will continue to be the trade of the century.

I, on the other hand, believe that Central Banks will continue printing until, as my favourite West Coast skeptic Bill Fleckenstein says, “the bond market takes away the keys.”

It’s foolish to believe that the end-game is anything but inflation. And even though increasing debt seems scary, if there is one thing that I am sure of, it’s that they will figure out a way to make even more of it. https://www.zerohedge.com/news/2018-03-24/its-foolish-believe-endgame-anything-inflation

Actually, the USA has no real intention to pay back its debt.

Its leaders basically hope to not pay it back, but if some payment is needed they hope that it will be in inflated dollars worth less than what the USA borrowed.

Foreign creditors will not be pleased.

Not paying back debt is wicked:

The wicked borrows and does not repay … (Psalm 37:21)

The Bible has an end time prophecy that the “bond market” will essentially take “away the keys”:

6 “Will not all these take up a proverb against him,
And a taunting riddle against him, and say,
‘Woe to him who increases
What is not his — how long?
And to him who loads himself with many pledges’?
7 Will not your creditors rise up suddenly?
Will they not awaken who oppress you?
And you will become their booty.
8 Because you have plundered many nations,
All the remnant of the people shall plunder you (Habakkuk 2:6-8)

The USA is believed to be the most indebted nation in the history of the world. Habakkuk’s prophecy is for the end time and cannot be directed towards the tiny nation called Israel. Israel simply does not have enemy creditors. But the USA has actual, past, and potential enemies as creditors.

Furthermore, consider that while the USA has been accumulating pledges in the form of US Treasury bonds and notes, the Chinese have been accumulating gold (see China, Gold, and the AIIB). Various ones in Europe have been repatriating gold from the USA, like the Germans (see Germany is repatriating and accumulating gold–why?). Germany is getting more gold. The Bible teaches that the final King of the North will accumulate gold and take it from Egypt in Daniel 11:40-43; cf. Revelation 18).

This diluting of the value of currency (called “dross” anciently), which is what the USA has been doing with its debt and quantitative easing policies, is condemned in the Bible.

4 Take away the dross from silver (Proverbs 25:4a).

22 Your silver has become dross, Your wine mixed with water. (Isaiah 1:22)

25 I will turn My hand against you, And thoroughly purge away your dross, And take away all your alloy. (Isaiah 1:25)

18 “Son of man, the house of Israel has become dross to Me; they are all bronze, tin, iron, and lead, in the midst of a furnace; they have become dross from silver. 19 Therefore thus says the Lord God: ‘Because you have all become dross, therefore behold, I will gather you into the midst of Jerusalem. 20 As men gather silver, bronze, iron, lead, and tin into the midst of a furnace, to blow fire on it, to melt it; so I will gather you in My anger and in My fury, and I will leave you there and melt you. 21 Yes, I will gather you and blow on you with the fire of My wrath, and you shall be melted in its midst. 22 As silver is melted in the midst of a furnace, so shall you be melted in its midst; then you shall know that I, the Lord, have poured out My fury on you.’” (Ezekiel 22:18-22)

Although the Bible warns against using dross and diluting the money supply, many modern ‘experts’ have a different view. The wrong views on economics will lead to economic problems and ultimately the total crash of the dollar of the USA. China and others see some of this.

Printing more and contributing to hyperinflation is not going to solve the debt problems of the USA. It has not worked for Zimbabwe, which has been doing this on and off for some time.

The USA, because of the role of its dollar, can look to get away with this for longer than other nations, but the end result will be much worse than most think.

Eventually, interest on the acknowledged debt will rise and become a viscous circle that will spiral to the death of the US dollar.

There are disastrous changes that will come to the USA (Daniel 11:39; see also USA in Prophecy: The Strongest Fortresses)–and its debt and other monetary practices–which one day will cause massive hyperinflation–will be a cause (cf. Habakkuk 2:6-8; see also USA in Prophecy: The Strongest Fortresses ).

But since many leading so-called ‘economists’ are political hacks and/or have a political agenda, do not expect too many prominent ones to have sufficient influence to resolve the problems in the USA.

Hyperinflation will hit the USA and its results will be worse than almost anyone realizes.

Some items of possibly related interest may include:

The End of US Dollar Dominance Is the USA losing its economic status? What about the petro-gold-yuan? A related video is also available: US Dollar being challenged by Gold-Petro-Yuan.
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Who is the King of the West? Why is there no Final End-Time King of the West in Bible Prophecy? Is the United States the King of the West? Here is a version in the Spanish language: ¿Quién es el Rey del Occidente? ¿Por qué no hay un Rey del Occidente en la profecía del tiempo del fin? A related sermon is also available: The Bible, the USA, and the King of the West.
Who is the King of the North? Is there one? Do biblical and Roman Catholic prophecies for the Great Monarch point to the same leader? Should he be followed? Who will be the King of the North discussed in Daniel 11? Is a nuclear attack prophesied to happen to the English-speaking peoples of the United States, Great Britain, Canada, Australia, and New Zealand? When do the 1335 days, 1290 days, and 1260 days (the time, times, and half a time) of Daniel 12 begin? When does the Bible show that economic collapse will affect the United States? In the Spanish language check out ¿Quién es el Rey del Norte? Here are links to two related videos: The King of the North is Alive: What to Look Out For and The Future King of the North.
USA in Prophecy: The Strongest Fortresses Can you point to scriptures, like Daniel 11:39, that point to the USA in the 21st century? This article does. Two related sermon are available: Identifying the USA and its Destruction in Prophecy and Do these 7 prophesies point to the end of the USA?
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The Times of the Gentiles Has there been more than one time of the Gentiles? Are we in it now or in the time of Anglo-America? What will the final time of the Gentiles be like? A related sermon is available and is titled: The Times of the Gentiles.
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When Will the Great Tribulation Begin? 2020, 2021, or 2022? Can the Great Tribulation begin today? What happens before the Great Tribulation in the “beginning of sorrows”? What happens in the Great Tribulation and the Day of the Lord? Is this the time of the Gentiles? When is the earliest that the Great Tribulation can begin? What is the Day of the Lord? Who are the 144,000? Here is a version of the article in the Spanish language: ¿Puede la Gran Tribulación comenzar en el 2020 o 2021? ¿Es el Tiempo de los Gentiles? You can also see the English language sermon videos: The Great Tribulation from the Mount of Olives and Can the Great Tribulation begin before 2020? A shorter and newer video is: Could the Great Tribulation Begin in 2020? Here is a link to the Spanish version of that video: ¿Podría la Gran Tribulación comenzar en 2020?
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