The extreme increase in US government budget deficits and runaway inflation in the US money supply over the past two years both signal a significant decline in the purchasing power of the US dollar.
Even though the Federal Open Market Committee attempted last week to claim that inflation is only “moderately” above 2%, here are the 12-month price changes through June 2021, as reported in July by the US Bureau of Labor Statistics and the US Bureau of Economic Analysis:
â¢ Personal consumption expenditure up 4.0%
â¢ Consumer price index up 5.4%
â¢ Producer price index up 7.3 percent
â¢ Import price index up 11.2%
â¢ Export price index up 16.8%
I don’t consider any of them to be moderately above 2%.
Right now, just about everyone is aware of rising consumer prices in America and around the world. Fed and government officials are primarily trying to trick the public into believing that these price increases will be “transient.” One notable exception is former Fed Chairman and current U.S. Treasury Secretary Janet Yellen, who recently voiced her opinion that the price hike will reach higher and last longer than others claim. government officials.
If the above information is not enough to worry about the future value of the US dollar, you may want to consider the following:
â¢ At the time of its March 2021 financial report, the Japanese Government’s Pension Investment Fund had $ 1.7 trillion in assets, the largest such fund in the world. As of March 2020, 47% of this fund’s assets were held in US Treasury securities. The dramatic but little-reported news is that in March 2021, this fund’s holdings of US Treasury debt represented only 35% of total assets. This change indicates that during the year ended March 2021, the fund had unloaded at least $ 200 billion in US Treasuries!
â¢ Last Wednesday, July 28, the US Federal Reserve issued a press release announcing the creation of two new repo facilities. Under a new national permanent repo facility, the Federal Reserve is prepared to indefinitely loan major U.S. banks up to $ 500 billion in overnight loans (using banks’ holdings of U.S. Treasury securities as collateral) at an interest rate initially of 0.25%. annually. The recipients of this virtually free money are just the 24 major business partners of the Federal Reserve Bank of New York. The Fed went on to say that coverage over time will be expanded to include other major banks. Under the new foreign permanent repo facility, the Fed will lend up to $ 60 billion in overnight loans (against holdings of US Treasury securities) to non-US central banks, again at a initial interest rate of only 0.25%.
Why would the world’s largest pension fund aggressively reduce its holdings of US dollars? Why does the Federal Reserve Bank deem it necessary to commit indefinitely to providing banks with up to more than half a trillion dollars in overnight loans with virtually no interest charges?
Obviously, the answer is that they are worried about the future value of the US dollar.
Even if you weren’t before, are you starting to worry now?
Patrick A. Heller has been honored as FUN Numismatic Ambassador 2019. He is also the recipient of the 2018 Glenn Smedley Memorial Service Award from the American Numismatic Association, the 2017 Exemplary Service Award, the Harry Forman National Dealer of the Year Award 2012 and the 2008 Presidential Award. Over the years, he has also been honored by the Numismatic Literary Guild (including twice in 2020), the Professional Numismatists Guild, the Industry Council for Tangible Assets and the Michigan State Numismatic Society. He is the communications manager for Liberty Coin Service in Lansing, Michigan, and writes Perspectives of freedom, a monthly newsletter on rare coins and precious metals. Past newsletter issues can be viewed at www.libertycoinservice.com. Some of his radio comments titled “The Things You ‘Know’ That Just Are Not So, And The Important News You Need To Know” can be heard at 8:45 am on Wednesday and Friday mornings at 1:20 pm WILS in Lansing (which broadcasts live and is part of the audio archive posted at www.1320wils.com).