The Fed is Running Out of Financial Tricks


For the past few years I have been writing about the financial maneuver called Quantitative Easing (QE). I have often remarked that money printing, which began in 2009 during the financial crisis, only postponed the eventual end to fiat money.

For years the US government packaged mortgages into bonds that carried a AAA rating and a US government agency backing. In 2007 those bonds began to default.

Let’s take a trip back in time to see how it all happened.

In 1977 Congress passed the Community Reinvestment Act which pressured banks to provide mortgages to people with questionable resources to pay off the loans. That practice grew and by the late 1990’s came to be known as sub-prime loans. The Federal government essentially threatened banks to make mortgage loans based on dubious income (alimony/child support, etc). The weak mortgages were packaged with solid loans and sold all over the world to individuals and major money center banks.

When those toxic mortgages began to default in 2007, the financial markets began to melt down. The Federal Reserve decided to create money out of thin air (QE) and purchase the toxic mortgage bonds from the banks. The idea was that once the markets stabilized, the Fed would raise interest rates and pay off the $4 trillion in debt it created and all would be well.

Last October 3, 2018 the Fed tried again to raise interest rates and the financial markets cratered. The Fed put on the brakes and began lowering interest rates to once again stabilize the markets. Since 2007 the Fed’s debt has only slightly been reduced.

Now with the world drowning in debt and the global market weakening, the Fed began a form of QE again, except this time there is no talk of paying off debt, just adding to it to try to keep the global economy growing.

Any sensible person that has ever balanced a checkbook knows that at some point the global economy will crash under a mountain of debt currently estimated at $244 trillion. I have often quoted Revelation 6:5-6 as the meltdown that happens after the church is gone (1 Thess. 4:16-17) from which there will be no escape. Global hyperinflation Venezuela-style can happen suddenly.

Saturday morning while going through my list of websites looking for news for the coming week, I came across a post by a writer for Rapture Ready, Todd Starnes. His post: The Fed is Running Out of Financial Tricks is a must read (here).