Monetary crisis: Is the Fed to blame?

Our political leaders told us that inflation is transitory, the Banking System is fine, and that deficits don’t matter as Modern Monetary Theory allows us to print as much money as we need to fund deficit spending on welfare (for the 51% of voters who do not pay taxes). They have also taught our youth that the reason why wages have failed to keep up with the cost of food, energy, shelter, public education, etc. is because Capitalism (free markets) has failed.
Accordingly, our political leaders now tell us we may have to do away with Cash and convert to a Central Bank Digital Currency (“CBDC”) controlled by the government.
So this begs a number of questions:
Why did the Federal Reserve (the Fed) invent QE1, QE2, QE3 when China stopped loaning us dollars (by buying Treasuries)?
Why did the Fed print $9 trillion so it could buy Treasuries and Mortgaged-Backed Securities? Was it to help fund deficit spending and Wall Street?
Why were banks incentivized to purchase huge amounts of Treasuries paying only 2% as “safe stress-test assets” rather than making loans to small businesses at 6%? Was it to help fund deficit spending?
Why were interest rates lowered from 7% to 0% for the past 11 years and distort the price of money? Was it to help the Government finance the $20 trillion of deficits since 2009?
How will the Government finance the current deficit projected to be $2.2 trillion? Another Fed loan to ourselves again?
Has the Fed money printing resulted in the imminent loss of the Global Reserve Currency status of the dollar? Will the Fed still be able to loan money to ourselves? If not, that is when the tide goes out—and we will see all those who have been swimming naked.
Did distorted cheap credit cause bubbles in the stock, bond, and housing markets?
Has the Fed been good central planners?
History has shown time and again that free-market capitalism has produced massive amounts of wealth and prosperity, whereas as Communism/Marxism/Socialism under the guidance of their central planners have consistently generated only poverty and despair.
We close with guidance from holy Scripture: “For the time will come when people will not put up with sound doctrine. Instead, to suit their own desires, they will turn their ears away from the truth and turn aside to myths.” [2 Timothy 4]. Let us remember this when the Debt Ceiling debate begins again this summer and the myth “that we must pay our bills ($2.2T deficits)” is again preached.

Steve Gardes is a Certified Public Accountant (CPA) and Certified Valuation Analyst (CVA) with over 40 years of public accounting experience.