Willful Blindness, Societal Rift & Death Of The Dollar


The government’s interest expense is now less than 8% of total expenditures. That is the lowest percentage since at least 1947. Now contemplate the following:

  • Total Federal Debt has risen 8320% since 1966.
  • Federal Debt to GDP is 127%, up from 40% in 1966.
  • Interest expense declined by $46 billion as Treasury debt rose by over $7 trillion in the last year.

Manipulating interest rates to allow the proliferation of debt comes at a steep cost.

The Consequence: Wealth Inequality

Monetary policy has been a primary driver of wealth inequality. Current monetary policy employs low-interest rates and spurs price inflation to drive temporary economic activity and goose asset prices.

The wealthy tend to consume a relatively small percentage of their wealth. As such, inflation is not a big concern for them. On the other hand, low-interest rates and rising asset prices benefit the large percentage of wealth they don’t spend.  Per the Federal Reserve, the top 1% of Americans own 52.75% of corporate equities and mutual funds.

The poor frequently spend their entire paychecks and, at times, any sparse savings on consumption. Inflation, even when it’s low, reduces the purchasing power of their earnings. Other than small retirement plan savings, in some cases, the poor receive little to no benefit from rising asset prices but they do pay for inflation.

We explained in detail the Fed’s role in widening the wealth gap in our article Two Percent for the One Percent. The article’s summary started as follows:

The central banking scheme of supporting economic growth through increasing levels of debt only makes sense if “growth at all cost” uniformly benefits all citizens, but it does not. There is a big difference between growth and prosperity. Furthermore, an inflationary policy that aims to minimize the burden of debt while at the same time aggravating the growth of those burdens is taking a serious toll on global economic and social stability.”

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