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IPFS News Link • Economy - Economics USA

When the Bubble Pops, Will You Be Ready?

• https://libertarianinstitute.org by David Brady

 But underlying all of the obvious issues was that of economic destruction being laid down before the American people in the form of the Federal Reserve's response to the economic collapse caused by lockdowns. The Federal Reserve has laid down a suicide path for the United States' economy.

The money supply is created in part by the private banks making loans and the Federal Reserve monetizing the debt, as well as allowing banks to transfer funds between one another. During the shutdown of the country, the Federal Reserve took unprecedented steps to allow the easy flow of credit, in a sour attempt to prop up the bubble economy. Much like after the 2008 housing market crash, the Federal Reserve slashed the Federal Fund Interest Rate to near 0% in 2020. The Federal Funds Rate being the minimum interest rate that banks must charge in transactions of reserves between one another. This rate affects most consumer interest rates that will result in credit flowing to the economy. This allowed the economy to brace for its immediate collapse that followed the popped bubble. Furthermore, the Federal Reserve, in March of 2020, dropped Reserve requirements (the required percentage of deposits it is legally supposed to retain in reserve), to 0%. By dropping them to zero it allows banks to continually loan out the money deposited to them, retroactively increasing the monetary supply (as depositors work under the illusion that the money loaned out is still in their accounts).


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