The Inherent Failure of Money Printing: Taking Away the Punchbowl

In our last blog I wrote about Belarus. Since then, a headline in one of the leading Russian newspapers said “Russia Stops Loaning Money to Belarus and Belarus Has Collapsed.”  If the US government doesn’t wake up and stop printing money and spending sooner than later the Wall Street Journal (if it’s still in business) will headline “Federal Reserve Stops Printing Money, Markets Collapse.”  Things are getting serious, very serious, and the US Government needs to stop spending money and printing money now or we will read that headline.  It’s not too late it the government would stop spending now and let the banks and companies fail that need to and should fail. If anyone read the book or saw the movie Too Big to Fail, the one lesson is no entity is too big to fail and we will all survive if we let them fail.

The United States is two years into the Federal Reserve’s Quantitative Easing Programs, and debt levels all across the world have shot up as all nations continue to follow the path of printing more and more money.  The unemployment rate is holding steady at very high levels and the price of food and energy continue to rise, but the answer in the US seems to always be the same- “print more money”.  For now, the US is able to save its ass because we have the luxury to export inflationary pressures to nations across the globe since we are printing the reserve global currency- dollars.  Unfortunately, many of these nations, Greece, Ireland, Portugal, etc  have already buried themselves in the promises of debt and money printing prosperity and are now getting hit with the double whammy of inflation and debt concern.  Each time a developing nation gets taken out the way like Belarus did, the global supply chain ladder is tipped off as the economy fails to adjust to the higher prices.  Unfortunately, the ladder itself eventually comes crashing down, and the guy at the top falls hardest- yes, that’s you.