My apologies are given in advance. Why? I’m presenting more information regarding repurchase agreements. As a reader, it is should be simple to deduce that recent extreme use of repurchase agreements is worthy of strong consideration and concern. If this your first time reading about these, feel free to read this article, written by me, describing repurchase agreements(repos). If needed, read that article first, then return back to this writing.
In this blog entry, “How Excessive Government Spending Sparked a Liquidity Crisis”, Craig Eyermann lists how the implementation of the use of repos makes, since September 2019, The Federal reserve is the largest holder of United States Government debt. Many of the points made in his article should raise some concerns; which is why I continue to repost articles related to this subject.
Regardless how the mainstream news media spins this, inflation is a monetary phenomenon. Of course, these individuals will state that inflation is low citing the Consumer Price Index as support of this spurious claim. Rising prices do not always constitute inflation, due to the fact the prices of all goods are not homogeneous.
The expansion of the monetary base(inflation)is directly correlated to the overspending by the federal government. With this over spending, deficits are generated, and debt is used to balance the budget. The budget never is balanced since the behavior is rewarded. The losers, in this scenario, are the individuals who are savers or on a fixed income stream. Also: The individuals who are lower income earners.