Bernanke Hopes for Price Stability, But is Contributing to Future Hyperinflation

Ben Bernanke

The U.S. Federal Reserve Chairman spoke yesterday and likely contributed to some market changes (bolding mine):

September 1, 2012 CNN…

Ben Bernanke’s…Fed has stockpiled about $1.6 trillion in Treasuries at low yields, and when those yields start to rise, it could stand to lose a substantial amount of money, those critics say. Bernanke dismissed those concerns…When the Fed buys bonds, it’s not spending the government’s cash. Rather it creates the money itself, basically by electronically crediting the money to banks…”Monetary policy can achieve the most for the country by focusing generally on improving economic performance,” Bernanke said. http://economy.money.cnn.com/2012/09/01/how-fed-stimulus-earns-a-profit-for-taxpayers/

JACKSON HOLE, Wyo. — The Federal Reserve chairman, Ben S. Bernanke, delivered a detailed and forceful argument on Friday for new steps to stimulate the economy…Mr. Bernanke said that the Fed’s efforts over the last several years had helped to hasten economic recovery, that there was a clear need for additional action and that the likely benefits of new steps to stimulate growth outweighed the potential costs.

“It is important to achieve further progress, particularly in the labor market,” Mr. Bernanke said. “Taking due account of the uncertainties and limits of its policy tools, the Federal Reserve will provide additional policy accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability.”

Some analysts expect the Fed to announce a new round of asset purchases after that meeting, further expanding its holdings of Treasury securities and mortgage-backed securities to reduce borrowing costs and spur investment. Others expect that it will instead announce its intent to keep its benchmark interest rate near zero beyond its current forecast of late 2014…

Stocks fell slightly after the release of Mr. Bernanke’s remarks, then climbed again. Commodities like gold and oil also increased.

Mr. Bernanke devoted much of his speech to asset purchases. http://www.nytimes.com/2012/09/01/business/economy/fed-chairman-pushes-hard-for-new-steps-to-spur-growth.html?pagewanted=all

In the interest of completeness, let me state that the writer of the first news item, which I only included selected excerpts above from CNN, actually supports the moves and proposals by the Fed Chairman. The writer apparently does not believe that the amount of “stimulus” money created is enough to cause problems, that this program will make the government money, and it will help the economy. I believe that that approach is short-sighted and ignores the cumulative effective of deficit spending and currency devaluation. The CNN writer (Annalyn Censky) may be correct in the short-run, but the Bible, biblical prophecy, and the basic principles of an economy support my conclusions (and yes, in addition to the Bible, FWIW I have taken many college and university courses on economics, finance, and accounting–one of my degrees is a Bachelor’s cum laude in Accounting and did study finance and economics at the graduate/Master’s level from two universities, including the University of Southern California where I received my Master’s degree).

Interestingly, A couple of months ago, replying to Ben Bernanke’s comments back then (and how the USA has handled itself), Russia’s Prime Minister Putin actually said:

They are behaving like hooligans, switching on the printing press and tossing them around the whole world, forgetting their main obligations.

So, the Russian leader does not agree that there should be another round of “quantitative easing/asset repurchases” by the US Federal Reserve. The Russian Prime Minister is correct that what the USA is doing is wrong.

The so-called “asset repurchasing” program is mainly a sham operation that debases the value of the U.S. dollar (mainly the government prints up money electronically and the “asset” purchased is a U.S. treasury note, not a real asset like, let’s say, an oil well; yes there are also some mortgages purchased which have ties to real assets, but there are problems there as well). And that may be why the price of items such as gold went up after the Fed Chairman’s comments.

Inflating the money supply through currency debasing (QE1 and QE2) and debt (“stimulus” programs) is not something advocated in the Bible. Notice:

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

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

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

Dross is a cheaper metal that is normally placed inside a covering of a precious metal like silver. Governments began to do this thousands of years ago when they had financial problems. Putting dross into silver cheapens currency, just like putting water into wine dilutes the wine’s value. In modern times, government spending in excess of revenues and quantitative easing programs (QE1 and QE2, from the Fed Chairman) are a way to dilute the value of currencies. This is not the biblical solution to US economic problems.

Now, the real cause of why all of this is happening is sin. Because of it’s increasing secularism, greed, and tolerance for sexual, abortive, and other sins, the USA is getting closer to reaping more what it has sown:

7 Do not be deceived, God is not mocked; for whatever a man sows, that he will also reap. 8 For he who sows to his flesh will of the flesh reap corruption, but he who sows to the Spirit will of the Spirit reap everlasting life. (Galatians 6:7-8)

One of the many cursings that were prophesied in the Bible to be reaped for disobedience was that of accumulation of debt:

43 The alien who is among you shall rise higher and higher above you, and you shall come down lower and lower. 44 He shall lend to you, but you shall not lend to him; he shall be the head, and you shall be the tail. 45 Moreover all these curses shall come upon you and pursue and overtake you, until you are destroyed, because you did not obey the voice of the LORD your God, to keep His commandments and His statutes which He commanded you (Deuteronomy 28:42-45).

As the Anglo-American nations have not kept God’s commandments, they have become the greatest debtor nations of all time. And while some do not count quantitative easing as “debt”, it is an improper “solution” to the USA’s economic woes.

But since Ben Bernanke will not advocate that the USA turn to God, he seems to think that diluting the currency is the best choice.

Carnally speaking, gold tends to stop the possibility of massive inflation as governments still have not figured out ways to massively produce it. Yet, they can do that to their paper/electronic money.

At some point in time, the USA will likely start to experience massive inflation (which is something that the Fed Chairman should realize). And afterwards, its creditors will rise up (Habakkuk 2:7). The policies of the Federal Reserve Chairman, unless dramatically altered in a different direction relatively soon, are setting the stage for hyperinflation in the U.S.A.–have no doubt about it.

Electronically “creating” more U.S. dollars may stimulate parts of the U.S. economy, but the more dollars that are produced and backed by nothing, the sooner the world will realize that the U.S. dollar cannot remains its primary reserve currency. When this happens, the U.S.A.’s economy will be massively hurt. And much more than people like the Fed Chairman seem to want to admit.

The world is changing and the USA and its Anglo-descended allies are losing their financial dominance in the world. And while there will be some temporary rises in the value of the US dollar for a while (and likely when there is more civil unrest in Europe), the trend for the U.S. dollar and economy is clearly down.

Without massive national repentance, the Bible is clear that complete destruction of the economy, and even government, of the USA is certain. This is something that leaders, such as the Fed Chairman, need to know.

Ben Bernanke and others may wish to consider studying the following prophetically-oriented articles:

Anglo – America in Prophecy & the Lost Tribes of Israel Are the Americans, Canadians, British, Scottish, Welsh, Australians, Anglo-Southern Africans, and New Zealanders descendants of Joseph? Where are the lost ten-tribes of Israel? Who are the lost tribes of Israel? Will God punish the U.S.A., Canada, United Kingdom, and other Anglo nations? Why might God allow them to be punished first?
Will the Anglo-Nations be Divided? Will the lands of the United States, United Kingdom, Canada, Australia, and New Zealand be divided? What does Bible prophecy teach? Are there non-biblical prophecies that support this idea? Who will divide those lands? Who will end up with the lands and the people?
Canada in Prophecy: What Does Bible Prophecy, Catholic Prophecy, and other Predictions Suggest About the Future of Canada? There are prophecies that suggest involvement with Canada. And many are not positive about its future.
Who is the King of the West? Why is there no End-Time King of the West in Bible Prophecy? Is the United States the King of the West?
The Plain Truth About Gold in Prophecy. How Should a Christian View Gold? What do economists and the Bible teach about gold? Gold and silver may drop in value. Inflation/deflation? What do Christians need to know about gold?