Posted on 12/31/2025 8:50:36 AM PST by Angelino97
Open your wallet and remove a $20 bill. On the front, it reads: “Federal Reserve Note.” To understand the coming financial crisis, we need to trace the journey that bill took to reach your wallet. To accommodate the myriad ways in which the federal government subsidizes Americans, the Federal Reserve is about to unleash waves of new money.
Things are going to get worse, not better. With inflation still too high, the Federal Reserve announced it will begin injecting another $40 billion into the money supply per month.
Like all money, the bill in your wallet was created to finance something the government wanted to fund. Congress is under pressure to extend Obamacare subsidies, for example. Only a heartless monster would deny basic health coverage to the most vulnerable Americans, we are told. People are going to die if the legislation doesn’t pass. What lawmaker wants the blood of poor Americans on his hands?
Missing from this conversation and every discussion about expanding government subsidies for Americans is the cost that the rest of America must bear. Subsidies increase prices. You don’t need an academic paper or a complex supply-demand equation. Just reflect on your lived experience. In all areas where the government has tried to help some Americans afford a good or service, such as education, healthcare, childcare, and even housing, subsidies have made those goods and services more expensive. Meanwhile, unsubsidized things that used to be luxuries, such as electronics, plastic surgery, and clothing, have all come down in price over time. When it comes to subsidies, consumers are better off without government help.
Medical care, in particular, has spun out of control. With nearly 9 in 10 Americans receiving some form of government assistance, the cost of medical care has skyrocketed to the point that it’s almost completely unaffordable without continued growth of subsidies. Healthcare subsidies account for the single largest share of the federal budget, and their costs continue to climb.
On paper, the Federal Reserve is supposed to protect Americans from inflation and unemployment. In reality, it prints money to finance the government. Its activity is shrouded in mystery, but when you strip away complicated explanations about things like repo agreements and bond purchases, the Federal Reserve, is printing money to prop up federal spending, mostly on subsidies and interest on debt.
On Dec. 10, 2025, Federal Reserve Chairman Jerome Powell held a press conference during which he used opaque jargon to mask how desperate the situation has become and the extreme measures the Federal Reserve is now taking to prop up federal debt. The headlines screaming that the Federal Reserve is “lowering interest rates,” mask the lengths to which the Fed must now go to make interest rates follow its policy.
The demand for U.S. debt has declined. This is because the combination of default risk and inflation has made the interest returns on government bonds unattractive compared with other investments, such as gold. The supply of U.S. debt does not match the demand for U.S. debt at the “price,” which is what an interest rate really is.
If the Federal Reserve were sticking to its mandate (lowering inflation, securing low unemployment), it would not have reduced interest rates, and it would not be adding billions to the economy. The Fed’s inflation target is 2.0 percent. Actual inflation is running at 2.8 percent, if you believe official statistics. Some think it’s much higher. The economy “will rise 1.7 percent this year and 2.3 percent next year, somewhat stronger than projected in September,” according to Powell. Unemployment is currently at 4.5 percent. On paper, the economy is doing great.
So, if you believe official statistics, it makes no sense that the Fed is now planning to buy $40 billion in debt at this time. By comparison, the Fed spent $80 billion per month following the worst financial crisis since the Great Recession. So this spending is approaching levels seen in a severe economic crisis.
On top of that, the Fed is ending limits on “repo” contracts. These contracts, some suspect, are another way the Federal Reserve uses printed money to encourage third parties to buy and hold U.S. debt. Without those subsidies, the market would extract a much higher interest rate from the federal government. The debt has become so large that the whole system could buckle under even a modest increase in the interest rate.
Returning to your $20 bill: It was born when the U.S. Treasury withdrew money from the Federal Reserve to spend it on something. When that dollar leaves the government’s hands to pay a doctor, nurse, pharmacist, or insurance company, it begins circulating in the economy. There are 170 million workers in the United States. The average American worker makes $5,200 per month. When the Federal Reserve creates $40 billion to finance government spending, that’s equivalent to a $235 dilution per paycheck.
It might not seem like much, but this dilution has a compounding effect. Those dollars find their way into grocery stores and pharmacies. They bid against you in the checkout line. Groceries prices increase and things like dry cleaning, auto repair, new cars, rent, and health insurance all get a little more expensive every time you go to purchase them. When the Federal Reserve prints money to subsidize the government, that erosion of purchasing power spreads through the economy.
At some point, $40 billion will not be enough. It will cost more and more money to subsidize federal borrowing, and inflated prices will accelerate the totals being financed. That’s the one thing we know about all subsidies. Alternatively, the debt crisis and/or hyperinflation could be delayed by a massive deflationary event like the 2008 Great Financial Crisis or the 2020 COVID-related financial crisis, both of which were used as an excuse for the Federal Reserve to buy trillions in debt using printed money.
Yes, the government needs a massive shock to the system and large-scale unemployment to manage its debt crisis. Otherwise, the erosion of the dollar will accelerate, making life increasingly unaffordable for everyday Americans. Either way, the massive borrowing will cause misery for the working American.
When people say subsidies are about caring for people and compassion, they’re only looking at one corner of the bigger picture. There is no free lunch. When the government subsidizes something, it must take purchasing power from somebody else. Who speaks for the silent victims of these subsidies? What about working Americans who sacrifice their precious time and energy to provide for their own families?
Their wages can’t compete with the Federal Reserve’s printing press. That money printing will cause some of these Americans to go without childcare or health insurance. Some must cut back on food, prescription drugs, or car maintenance. Who speaks for them?
Nice to see you still think the democrat focus group tested ‘affordability crisis’ is real. You and a handful of others keep posting this BS here.
You’re either a troll or really really stupid.
This is the inevitable consequence of living in a “democracy” where 90% of the population believes it has a God-given right to a standard of living it can’t afford.
The very nature of advertising, credit cards, home shopping, and electronic payments combine to produce that impression.
This is one historical lesson that absolutely no one seems to learn. It didn’t work for Rome in the Third Century. It didn’t work for Germany in the 1920s. It didn’t work in Latin America in the 1970s. It sure as Hell didn’t work for Biden during his presidency.
We got COVID with a fever
Hotter than a pepper sprout
We’ve been spending our Jacksons
Since our Trump was rigged-vote out
Spending our Jacksons
On Somalis lair
Congress is spending our Jacksons
Go ahead and see if they care
And for politicians coming up for reelection, that's the important thing.
Excellent post. Thanks.
The costs will never come down until a lot of people in that industry, especially those in the extremely bloated administrative ranks, accept the fact that they’re going to have to make a lot less. And those costs won’t adjust until third party money is restricted or removed entirely. Third party money, through loans, grants, government welfare, etc. has driven up the cost of many things. Whether insanely high college tuition, even more insanely inflated medical costs, or absurd housing prices, what needs to happen is for the entire system to recalibrate so that products are priced according to what consumers can afford out of their own pockets.
We must work toward a true market economy that doesn’t make it ridiculously easy for people to spend beyond their personal means, and/or the nation’s collective means. There’s a very good reason the Bible talks about an every 7 year jubilee, in which debts were erased. Debt is destructive and should never be used beyond very short term needs. It’s insane that we take out 30-year mortgages to buy a home and as a result end up paying more than double the purchase price of the home, or that we take 5, 6, 7 years and even longer to pay for a car. We need a true economic reset, painful as that transition may be, especially for the creditors. We have to get off the hamster wheel of constant price inflation chased and driven even further by associated wage inflation and ever more debt.
Just look at the car commercials at Christmas time.
People buy a high-end car and surprise their spouse with it on Christmas morning. 🙄
I think it was every 50 years.
People don’t see the connection between printed, fiat money >>>> allowing massive government debt >>>> allowing bloated central government and marxist social-engineering and fraud.
There’s always been fraud and theft from government, but effectively “unlimited” money directly contributes to Somalis stealing massive $sums for “childcare” and 1000 other woke corruption schemes.
“Debt is destructive and should never be used beyond very short term needs. It’s insane that we take out 30-year mortgages to buy a home and as a result end up paying more than double the purchase price of the home, “
ROTFLMAO!
My rule of thumb is that debt is OK and it is used to finance an asset or a durable product over its expected life cycle. If you can afford the payments and the interest rate is comparatively low, there’s nothing wrong with financing a car over five years as long as you drive it for that full period of time (or — better yet — even longer). The same is true for a 30-year mortgage, and you don’t even have to live in it for the full 30 years to make the mortgage worthwhile, becaus a home is an asset that (unlike a car) can appreciate in value over time.
The problem with debt arises when the term of the debt exceeds the life cycle of the asset or product you’re financing. At a personal level, an irresponsible use of debt would be charging a vacation or groceries on a credit card and taking years to pay them off. In government, a comparable example is using 10-year to 30-year bonds to finance Social Security and Medicare outlays, or even routine government operations.
That would be the Sabbath year, which was only in part observed. The Jubilee was to be after seven Sabbath years, but was was never observed.
I agree.
To battle inflation, the Fed wants to inject MORE MONEY? WTF?
Joe Quisling Puppet Biden had the Feds print $10 trillion (the Build Back Better bill) to take care of 20 million illegal aliens. Where were the articles about “Printed Money” then? You wait until a Republican is in office to complain about the dollars decline in purchasing power.
To battle inflation, the Fed wants to inject MORE MONEY? WTF?
Everywhere.
You wait until a Republican is in office to complain about the dollars decline in purchasing power.
How do you know I wasn't complaining under Biden?
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