If you guessed China or Japan... Surprise! You're wrong.
Inflation! by Robert Romano
.... First, Fannie Mae and Freddie Mac were nationalized, which has already cost taxpayers more than $150 billion. Bear Stearns and AIG got their $210 billion. The $700 billion Troubled Asset Relief Program followed, but quickly abandoned its mission of purchasing devalued mortgage-backed securities (MBS), instead deferring to the Fed, which printed $1.25 trillion out of thin air to buy the Government Sponsored Enterprise paper. GM and Chrysler too got their bailouts totaling $80 billion.
Then, when Barack Obama took office, the $821 billion “stimulus” spending bill was enacted, and the Fed began expanding its U.S. treasuries holdings, first by $300 billion.
All told, it was a gargantuan, unprecedented $3.5 trillion expansion of government.
At the time, critics, including Americans for Limited Government (ALG), predicted that once the economy began to move again, strong inflation would follow, weakening the recovery. In “The Sky’s the Limit,” published on Jan. 14, 2009, I wrote, “the prediction is not for instant inflation, but that once market-based thawing does apparently begin to ensue, and all the excessive liquidity finds its way into the marketplace, demand will spike in one area or another and thus so will prices. There will be another asset bubble. And then the politicians will dutifully declare that the ‘recovery’ has ensued.”
Fast forward two years, add into the mix the Fed’s $600 billion QE2, ObamaCare, the Dodd-Frank financial takeover bill, and over $2 trillion in new government debt since Obama’s first budget was adopted, and the seeds of inflation have not only been planted, but watered and fertilized.
The Fed’s share of the national debt has soared, from $475 billion in Jan. 2009 to more than $1.2 trillion today. That now makes the central bank the number one lender to the U.S. government in the world, more than China or Japan.
Overall, the Fed’s total balance sheet has expanded from $896 billion in Aug. 2007 when its latest round of quantitative easing began, to over $2.5 trillion today, a 187 percent increase.
Now, prices are following suit....