Patriot,

Despite all the seemingly endless "stimulus"
money going around, the harsh reality is the majority of people
in this country are getting poorer.

Because we don't have freedom and a sound
currency, the rich keep getting richer, and we all know the
culprit behind the whole scheme. . .

The Federal Reserve.

Since the forced shutdowns of businesses
started last March and the ensuing actions by Congress to
re-inflate the economy, nothing has been done to solve the
underlying problems.

What we need is more freedom, more
transparency, and we need to Audit the Fed before they do any
more damage.

My column this week is about inflation really
kicking into high gear and what can be done to reverse course.

I hope you'll take a read below. And please
know I'm always grateful for all your support.

-Ron

Big Government and Big Inflation

April's 4.2 percent past year increase in the
Consumer Price Index is not likely to dissuade the Federal
Reserve from continuing its policy of near-zero interest rates.
Fed Chairman Jerome Powell believes the rising prices are just a
temporary phenomenon caused by the ending of lockdowns releasing
pent-up consumer demand.

Powell may be right that the ending of
lockdowns would inevitably be accompanied by a rise in prices.
However, this is just the latest reason the Fed has given for
putting off increasing interest rates. Powell does not want to
admit that the real reason the Fed will continue to keep rates
low is that increasing rates will cause the federal government's
interest payments to rise to unsustainable levels.

One way the Fed increases the money supply -
and thus lowers interest rates - is by purchasing US Treasury
securities. These purchases increase demand for US government
debt, keeping government's borrowing costs low. An expansionary
monetary policy thus enables increased federal spending and
deficits. Since the lockdowns, the Fed has worked overtime to
monetize federal debt, doubling its holdings of Treasury
securities.

A Truth in Accounting report from April
concluded the real federal debt is 123 trillion dollars - over
four times larger than the 28 trillion dollars "official" debt.
The higher debt calculation includes the federal government's
unfunded liabilities. The biggest unfunded liabilities are the 55
trillion dollars in promised but unfunded Medicare benefits and
the 41 trillion dollars in promised but unfunded Social Security
benefits.

Congress could transition away from
entitlement and welfare programs without harming current or
soon-to-be beneficiaries by cutting spending on militarism and
corporate welfare. Part of the savings from these cuts could be
used to pay down the debt, and part could be used to provide
payments for current and soon-to-be beneficiaries of government
programs while we transition to a free market.

Unfortunately, there is not much appetite in
Congress for spending cuts. The main Democratic criticisms of
President Biden's 1.52 trillion dollars budget, which increases
spending by 8.4 percent, are that Biden is not proposing bigger
increases in spending and debt, or in taxes on "the rich."
Biden's budget increases are in addition to the trillions in
other spending Biden is pursuing, including related to Covid,
infrastructure, and his "American Families Plan."

Republicans are making obligatory attacks on
Biden's spending, while also attacking Biden for increasing
military spending to "only" 753 billion dollars. Republican
complaints about Biden's big spending ring hollow given their
support for Presidents Donald Trump and George W. Bush's spending
increases and Republicans' proposals to spend billions on
infrastructure.

Some conservatives have even embraced the
madness of Modern Monetary Theory. These conservatives are urging
people to stop worrying about spending and debt and instead
figure out how to use Fed-financed government spending to advance
conservative ends.

The refusal of Congress to cut spending means
the Fed will keep increasing its balance sheet in an effort to
monetize skyrocketing debt. Eventually, the increasing debt and
inflation will lead to a major economic meltdown. The meltdown
will likely include a rejection of the dollar's world reserve
currency status.

The only way to avoid the crash is to spread
the truth among enough people to force Congress to reverse
course. Early steps in reversing course are blocking Biden's big
spending plans and passing Audit the Fed so the American people
can finally know the truth about the Federal Reserve's actions.

For Liberty,

Ron Paul
Chairman



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