The National Debt Clock is over $25 Trillion today as we continue to force-feed debt to an already obese nation. Just a month ago on April 7th the National Debt exceeded the $24 Trillion mark, and the velocity with which we continue to add debt is ferocious. Let that sink in $1 Trillion in 28 days. As Morningstar reported on May 4th, the Government is planning on borrowing another $2.99 Trillion in the 2nd quarter this year.
So, who is buying a huge chunk of these government bonds? The FED.
Yes, the Central Bank is backstopping these bonds and placing them on their balance sheets as assets. (You can’t see me smiling)
According to an article posted on Schiff Gold, “In just seven weeks, the central bank purchased $1.448 trillion in US Treasury securities. And in the process, it created trillions of dollars out of thin air and injected them into the economy. This is debt monetization on a massive scale.”
At 10XTS, during internal discussions last year in September when the Repo Operations Market was beginning to show significant signs of failure and reason for grave concern, we speculated at what radical implications this could have on our nation’s currency. The topic of a Digital Dollar came up, and we moved forward by engaging thought leaders in and around these topics. What we had not expected, is how swiftly the Covid-19 Pandemic would accelerate the shift towards digital currency, and the digital inter-banking and brokerage conversations that are absolutely necessary for our financial infrastructure.
Last year, if you mentioned anything about a digital currency or the shifting of our currency to a truly digital landscape to a Broker Dealer or Financial Regulatory body, your response would have been ice cold. Today the measures to take these actions have already been submitted to congress and there is significant momentum for their adoption. In turn, there will be a massive need for education by within the financial marketplace to prepare for this inevitable shift.
What happens now? There is no doubt that Congress and the Fed will continue down a path of unprecedented intervention. With US Unemployment numbers over 14.7% and a suspected 30% decline in GDP the near term future is clear, we will print more money. (Surprise!)
Friedrich August von Hayek said the following: “The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.”
I believe that today, those words are very fitting…