Conservative watchdog Judicial Watch filed the complaint with the FCC on Monday, accusing NBC of airing “obscene and indecent” content that was watched by millions, including children.
“The blasphemous Olympics’ Opening Ceremony, which included, among other obscene and indecent acts, a man partially exposing himself around children, is patently offensive for any sensible American and requires immediate FCC action against NBC,” Judicial Watch President Tom Fitton said in a statement. “The Justice Department should also launch an investigation, especially given the use of children in this obscene and indecent NBC broadcast.”
The opening ceremony featured a woke tableau of Leonardo da Vinci’s iconic painting The Last Supper. It included multiple scantily clothed drag queens, a Smurf-like demon, an obese lesibian playing the part of Jesus Christ, as well as an adult male who exposed his testicles while surrounded by children.
Other parts of the ceremony likewise had Satanic or apocalyptic overtones, including a beheaded Marie Antoinette and a the pale horse of death.
I thought it couldn't get worse… It does
They put in a "pale horse" just in case you weren't sure that this was all intentional. Straight out of revelations. Wtf is happeningpic.twitter.com/jIcgI3gpCq
According to the FCC, “federal law prohibits obscene, indecent and profane content from being broadcast on the radio or TV.”
The agency further defines “obscene” content as that which “appeals to an average person’s prurient interest; depicts or describes sexual conduct in a ‘patently offensive’ way; and, taken as a whole, lacks serious literary, artistic, political or scientific value.”
Multiple Christian institutions, including the French Catholic Church, also came forward with concerns about the skit, arguing it “included scenes of derision and mockery of Christianity.”
The outrage prompted a response from the Paris Olympics organizers, with spokesperson Anne Descamps issuing a half-hearted apology to believers who felt disrespected.
“There was clearly never an intention to show disrespect to any religious group,” she claimed during a news conference on Sunday.
“On the contrary, I think we tried to celebrate community, tolerance,” she added. “We believe this ambition was achieved. If people have taken any offense, we’re of course really sorry.”
However, the ceremony’s artistic director, Thomas Jolly, made it clear that the event’s message was deliberate.
“We wanted to talk about diversity,” Jolly said. “Diversity means being together. We wanted to include everyone, as simple as that.”
(Headline USA)Missouri Attorney General Andrew Bailey said this week he is filing a lawsuit against the Biden administration for flying thousands of illegal immigrants into the state.
In the lawsuit, Bailey accused the Department of Homeland Security of deliberately hiding information about flights it has chartered from the border into Missouri.
Bailey said he had submitted multiple Freedom of Information Act requests for additional transparency regarding these flights, but has been denied answers repeatedly.
“This game of ‘hide and seek’ violates the spirit and the letter of FOIA, which states that an agency shall withhold information only when the agency ‘reasonably foresees that disclosure would harm an interest protected by an exemption’ or if ‘disclosure is prohibited by law’,” the lawsuit said, according to KCTV.
Bailey argued Missourians had a right to know how many illegal immigrants were being shipped into their state by the Biden administration, as well as which countries those migrants were from.
“DHS’s withholding of crucial information has frustrated the ability of citizens to exercise the rights Congress outlined in the FOIA statute,” said the lawsuit.
“This lack of transparency and refusal to comply with lawful FOIA demands has hindered efforts by the Missouri Attorney General’s Office to determine the size and scope of illegal immigration within the Show Me state,” it added.
Bailey said the DHS’s continued stonewalling in this case was part of a larger pattern of deception and diversion the Biden administration has used to justify its immigration policies.
“Here in Missouri, we hold bad actors accountable when they refuse to obey the law, even the federal government. I will not stop until I obtain answers for Missourians,” Bailey said.
Earlier this summer, Missouri was one of 18 states that filed a lawsuit against the Biden administration over President Joe Biden’s “Circumvention of Lawful Pathways” executive order, which they said allowed “vast numbers of aliens to enter the country and receive instant work authorization and quick access to public benefits.”
“I do not believe that it is ultimately a solution to homelessness,” said Democrat Mayor Karen Bass, according to the Denver Gazette.
“How are they supposed to pay for their ticket, and what happens when they don’t pay?” she continued. “Does it go into a warrant and give us an excuse to incarcerate somebody?”
Los Angeles County Supervisors Chair Lindsey Horvath agreed with Bass, calling the order to clear out homeless camps “unconscionable.” The solution to homelessness is not “arrest,” she insisted. “It is not pushing people from community to community.”
Horvath also accused Newsom of setting a troubling precedent.
“The criminalization of homelessness and poverty is dangerous,” she said. “It does not work, and it will not stand in Los Angeles County.”
Newsom issued the executive order last month after the U.S. Supreme Court released a decision giving local officials more power to remove those illegally living on the streets and camping out in public parks.
Local governments are not legally obligated to follow Newsom’s order, but failure to do so could result in critical funds potentially being withheld.
“This executive order directs state agencies to move urgently to address dangerous encampments while supporting and assisting the individuals living in them—and provides guidance for cities and counties to do the same,” Newson said in a statement. “There are simply no more excuses. It’s time for everyone to do their part.”
Horvath warned Los Angeles officials would not tolerate a funding cut from Newsom’s government.
“I don’t think that threatening funding at a time where we’re trying to get more people served and more people housed is a place that anybody wants to be in,” she said.
California has the largest homeless population in the country, with more than 180,000 people in the state estimated to be living on the streets.
(Ken Silva, Headline USA) Last week, FBI Director Chris Wray walked back previous disinformation the bureau provided to Congress about Trump shooter Thomas Crooks having “previewed” his attack on a gaming platform called Steam.
Given Wray’s admission that his bureau briefed Congress with phony evidence—on top of a denial under oath that former President Donald Trump was actually shot—one would think the FBI had learned its lesson about giving lawmakers unconfirmed information.
However, the FBI did so again at a Tuesday congressional hearing, with Deputy Director Paul Abbate telling lawmakers about social media posts believed to be linked to Crooks—but which haven’t been verified.
🚨BREAKING: Gab founder @basedtorba just released an FBI Emergency Disclosure Request (EDR) that names Thomas Matthew Crooks's Biden-supporting social media account after FBI Deputy Director Paul Abbate falsely testified under oath to Congress.
“Something just very recently uncovered is a social media account, which is believed to be associated with the shooter in the 2019 to 2020 timeframe,” Abbate claimed.
“There were over 700 comments posted from this account,” he added. “Some of these comments, if ultimately attributable to the shooter, appear to reflect anti-Semitic and anti-immigration themes, espouse political violence, and are extreme in nature.”
The FBI's Paul Abbate says they may have found a social media account belonging to the Republican Trump shooter, Thomas Matthew Crooks, where he espoused antisemitic and anti-immigration rhetoric.pic.twitter.com/jQTHYbRMoH
— thee nasty rougarou in the machine (@theerougarou) July 30, 2024
The disclosure fueled immediate suspicion from conservatives who suspected the agency was, once again, trying to push a psy-op narrative that Trump was somehow to blame for his own assassination attempt and that Crooks—who donated to a far-left cause when he was 18, harbored right-wing attitudes.
“While the investigative team is still working to verify this account to determine if it did belong to the shooter, we believe it important to note, particularly given the general absence of information to date reflecting on the shooter’s potential motive,” Abbate claimed.
The deputy director was asked again about the social-media posts later in the hearing, and he reiterated that the FBI hadn’t confirmed that they indeed belonged to Crooks.
“This was just discovered, and it’s being closely analyzed right now,” he said.
“We need to verify that it in fact belonged to the now-deceased shooter, and that he made those comments,” he continued. “So that’s why I felt it important, in the interest of transparency, to share that here—but to add the caveat that we still have work to do.”
Among those who criticized the baseless innuendo was Gab CEO Andrew Torba, who has claimed that Crooks may have had an account on his platform, and that the shooter posted comments indicating he was a leftist.
BREAKING: The FBI is now claiming that the Trump shooter Thomas Matthew Crooks had an unspecified "social media account" in 2019/2020 (when he was 14/15 years old) that posted "anti-immigrant and anti-semitic" content.
However, it’s still unclear whether Crooks’s Gab account is authentic. While Gab received an Emergency Disclosure Request from the FBI, Headline USA understands that those are common: The FBI often sends numerous EDRs during investigations, and often those EDRs don’t yield useful evidence.
Furthermore, an open-source intelligence research who’s provided this publication with reliable information in the past said she investigated the “EpicMicrowave” account linked to Crooks. The researcher, “BX,” said she does not believe that account belonged to Crooks.
We already did, and we decided it was unlikely to be his account.
Abbate also told Congress on Tuesday that the authenticity of Crooks’s Gab account has yet to be verified.
“With the Gab account, though that’s been publicly revealed, we’re still working to cerify and verify that’s his account,” Abbate said in response to questions from Sen. Marsha Blackburn, R-Tenn.
(Ken Silva, Headline USA) Earlier this year, the leader of the white nationalist activist group Patriot Front downplayed the notion that the FBI was working to infiltrate his group.
“The FBI, I don’t believe, engages in the type of undercover infiltration that a lot of people attribute to it as much as people think,” Patriot Front leader Thomas Rousseau said on Patrick Bet-David’s popular podcast, released in June.
About two months later, the FBI released on Monday nearly 1,000 records that might make Rousseau rethink his earlier statement. Though almost the entire FBI file on the Patriot Front is redacted, it includes one record confirming that the bureau had at least one spy embedded with the group.
That record is an electronic communication that was written by an FBI agent in Philadelphia in August 2022.
“Information contained in this document pertains to the identity of a confidential human source (CHS),” the record stated, explaining the circumstances under which an informant’s identity might be publicly revealed. “CHS” is the FBI’s term for an undercover informant.
The FBI electronic communication included details of the informant’s work. For instance, in February 2019, the informant provided information to the FBI’s office in Charlotte.
“On February 11, 2019, FBI Charlotte received Confidential Human Source (CHS) reporting from [REDACTED] Division regarding [REDACTED],” the record stated.
There doesn’t appear to be any more information in the FBI’s heavily redacted file about the CHS or his activities.
Rousseau’s attorney, Jason Lee Van Dyke, declined to comment, other than to note that he’s not a member of the group. He also said he hasn’t spoken to Rousseau about the records.
“Of course, in my capacity as a private citizen and attorney who routinely comments on First Amendment issues generally, I would be willing to comment by saying that this seems to resolve the social media debate concerning whether Patriot Front is some kind of FBI ‘PsyOp’ used to create unrest and help the Democratic Party narrative,” the attorney added.
There were several other records released Tuesday that contain information about the FBI’s investigation of Patriot Front. An August 2019 FBI memo, for instance, suggested that a grand jury investigation may have been opened against the group or some of its members.
Additionally, dozens of redacted records presumably contain information about the FBI’s surveillance of Patriot Front.
Headline USA is not aware of any federal charges being levied against the Patriot Front or any of its members.
An FBI informant who was once a member of the Patriot Front was charged in 2022 with unlawfully possessing a firearm and ammunition by a convicted felon—a charge stemming from a March 2022 traffic stop in upstate New York, where police officers allegedly found him in possession of an illegally modified AR-15.
That informant, Michael Alan Jones, may have been the CHS discussed in the above-mentioned FBI memo, given that he lives close to Charlotte—the office that received information from a Patriot Front CHS in 2019. If that’s the case, it would be the first public confirmation that Jones was acting as an informant while in the Patriot Front—court records only confirmed that he spied on the Proud Boys.
Jones, who reportedly stormed the Capitol on Jan. 6, 2021, has been referred to as a “fed-ophile” by his former comrades, due to him previously being convicted of two felony sex crimes.
Longtime residents expressed concerns over rising crime attributed to the immigrant influx.
“It’s not about anti-migrants,” said Renee Collymore, the Democratic liaison for the local State Assembly district, who organized the protest. “It’s about safety first.”
Earlier this month, a shooting left two of the illegals dead and injured another. Another was charged with a stabbing that left the victim in critical condition back in June.
In response to the recent violence, New York City Mayor Eric Adams expressed concern, while insisting that most of the immigrants were not criminals deserving of this stigma.
“They’re extremely dangerous,” he said. “We’re dealing with violent individuals that are not representative of the overwhelming number of people who are coming here as migrant asylum seekers.”
The initial shelter opened in July 2023 and was largely embraced by the Clinton Hill community. However, a second shelter opened in April 2024 without their knowledge and caused the population of illegals in the neighborhood to surge to around 4,000.
According to the NYPD, the area holds the largest concentration of outside of Randall’s Island, where the migrant shelter is estimated to harbor some 64,000 illegals, although the public-owned island has relatively few other residents.
Locals started raising concerns earlier this year—with issues of excess trash, loitering, panhandling and homelessness at the forefront. Town halls and rallies against the shelters displayed signs with messages such as “Shelters are not helping the neighborhood,” “New York is not the only sanctuary city,” and “Taxpayers first.”
Unsurprisingly, council member Crystal Hudson sent a letter to Adams requesting more money to try to fix the crisis.
“The reality is that an influx in the population requires an increase in the resources our communities need,” she said. “… My office and my neighbors have been asking for your assistance for the better part of a year to no avail.”
It was around that time that a spokesperson for the Mayor’s Office highlighted the ever-growing migrant problem in the city: “We manage hundreds of people who continue to arrive in our city every day while also handling the 65,000 currently in the system.”
Immediately after President Joe Biden announced the end of his reelection campaign, a coalition of black women joined a Zoom call, hosted by a group known as “Win With Black Women,” to discuss the unprecedented power of their racial identity group.
“We’re together. We’re beautiful, we’re strong, we’re capable. We’re ready. We have incredible power in this group,” said participant Aimee Allison, according to the Associated Press. “People just were so hungry for that community and for that feeling of hope.”
While Zoom usually permits a maximum of 1,000 participants, an employee with the Big Tech company personally stepped in to allow 40,000 individuals to join.
Another group called “Black Men for Harris” met via Zoom on Monday, with 53,000 people registering for the event and pledging to vote for Harris.
The “White Women: Answer the Call” event featured several celebrities, including author Glennon Doyle, musical artist Pink, actress Connie Britton and TikTok groomer Arielle Fodor.
Throughout the meeting, these women claimed the task of “saving the world” fell onto their shoulders.
“BIPOC women have tapped us in as white women to step up, listen and get involved this election season,” said Fodor, who is famous for making political commentary while putting on the insufferably pedantic tone of an elementary-school teacher.
“… If you find yourself talking over or speaking for BIPOC individuals or, God forbid, correcting them, just take a beat,” she continued. “And instead we can put our listening ears on.”
“As white women we need to use our privilege to make positive changes.”
Former teacher turned “influencer” infantilizes the “white women for Kamala Harris” and suggests that white women should never “correct” black women. pic.twitter.com/uj00SfwZb9
Finally, a self-proclaimed group of “White Dudes for Harris” came together to support the veep, hosting another star-studded Zoom call featuring Transportation Secretary Pete Buttigieg, and Hollywood actors including Jeff Bridges, Joseph Gordon–Levitt, Mark Hamill, Sean Astin and Josh Gad.
Activist David Hogg, pundit George Conway and ex-boy-band performer Lance Bass were among the other participants who appeared on the chat with more than 100,000 fellow bros.
🔥🚨DEVELOPING: So over 400,000 Black women joined a Zoom for Kamala Harris a week ago and over 100,000 White men joined last night but every screenshot or video only shows 9 to 12 people max.
Where is the proof of the hundreds of thousands when only 300 people can join Zoom at… pic.twitter.com/W59MMoPw6v
— Dom Lucre | Breaker of Narratives (@dom_lucre) July 30, 2024
Reps. Eric Swalwell and Adam Schiff, both from Harris’s home state of California, also made appearances.
On the call, Buttigieg argued that a presidential candidate who fights for abortion will make men more free.
“Women’s freedom is exhibit A after Donald Trump abolished the right to choose,” Buttigieg claimed, referring to Trump’s appointment of conservative justices who reversed the controversial Roe v. Wadedecision and sent the issue of abortion back to individual states to decide.
“But of course, men are also more free in a country where we have a president who stands up for things like access to abortion,” claimed the former South Bend, Indiana mayor.
Buttigieg also argued that “politics is just vibes,” calling Harris’s vibes “incredible.”
At one point, Hamill ranted against Trump, referring to the Republican nominee as “mentally ill” and accused him of idolizing “dictators” such as Viktor Orban, the democratically elected prime minister of Hungary.
🔥🚨BREAKING: Star Wars actor Mark Hamill who was a member of the “White Dudes for Kamala” Zoom call randomly went ballistic on Donald Trump for no apparent reason.
Mark Hamill: “they want to do, get rid of the Department of Education completely. They're going to try and remake… pic.twitter.com/uCn8TxXxF6
— Dom Lucre | Breaker of Narratives (@dom_lucre) July 30, 2024
Several of the beta males celebrated not just the prospect of a woman president who would allow them to play second fiddle to minorities and women, but also a bonding session where they could talk openly about their feelings with one another.
“The idea that men can gather to talk about how we feel”
The Lord of the Rings actor Sean Astin supports “white dudes for Kamala Harris” because he wants men to talk to other men about their feelings. pic.twitter.com/c27gRMuRuV
Harris made no comment on the segregation of her supporting groups. However, many social media users were eager to share their opinions, including the conservative podcast hosts the Hodge Twins, who claimed to have registered a website for their new group.
Others wistfully imagined what a similar group would look like if Trump’s campaign were to organize one.
Obviously we have to do a White Dudes For Trump zoom call.
Who's in?
— Harrison H. Smith ✞ (@HarrisonHSmith) July 30, 2024
And satire site the Babylon Bee, perhaps inspired by Fodor, took the opportunity for a teachable moment by offering its readers a history lesson related to the Democrat Party and its troubling relationship with segregation.
(Headline USA) The U.S. will send $1.7 billion in military aid to Ukraine, officials announced on Monday, including an array of munitions for air defense systems, artillery, mortars and anti-tank and anti-ship missiles.
The package includes $1.5 billion in funding for long-term contracts through the Ukraine Security Assistance Initiative, and $200 million in immediate military aid taken from Pentagon stockpiles.
The latest infusion of weapons comes a bit more than two weeks after the NATO summit in Washington, where allies focused a significant amount of time on shoring up support for Ukraine as it fends off Russian forces. President Joe Biden announced during the summit that the U.S. would send a Patriot missile battery to Ukraine, answering a key plea from Ukrainian President Volodymyr Zelenskyy.
NATO members agreed to create a new program to provide reliable military aid to Ukraine and prepare for its eventual membership in the alliance. And they declared Ukraine was on an “irreversible” path to join NATO.
In the latest package, air defense munitions for National Advanced Surface-to-Air Missile Systems, or NASAMS, and High Mobility Artillery Rocket Systems, or HIMARS, as well as Javelin and other missiles will be provided through presidential drawdown authority, which allows the Pentagon to pull the weapons directly from its shelves. The package also includes anti-armor systems, artillery, small arms, demolition equipment and other spare parts and maintenance.
The Pentagon said the longer-term contracted weapons will include “capabilities to augment” Ukraine’s air defenses, including short- and medium-range munitions. The USAI will also provide funding for mortar rounds, anti-armor systems, electronic warfare equipment, explosives, secure communications systems and commercial satellite imagery services.
The weapons and equipment provided through USAI will go through the contracting process and so won’t get to the warfront for months or years.
White House national security spokesman John Kirby said Monday that the package includes “key capabilities for the fight.” He said this is the ninth military aid package for Ukraine since late April when Congress sent $95 billion in aid to Kyiv.
At that time, he said, “there were legitimate concerns that Russia would achieve a strategic breakthrough on the battlefield by the summer.” But since the funding passed Congress, “Ukraine’s defensive lines have been fortified and Ukrainian forces have continued to fight bravely and repel Russia’s advances.”
Defense Secretary Lloyd Austin most recently announced a package of $2.3 billion for Ukraine on July 2, bringing the total amount of aid to $55.4 billion since the war started in February 2022.
(Mike Maharrey, Money Metals News Service) “I go on the principle that a Public Debt is a Public curse and in a Rep. Govt. a greater than in any other.” – James Madison
This milestone will likely raise some eyebrows, but nobody will do anything about it.
That’s because politicians on both sides of the aisle committed to one thing – spending money to buy votes.
And sadly, most people don’t care.
It’s hard even to fathom this much debt. To put it in perspective, every American citizen would have to write a check for $103,834 to pay it off. If we limit the funding to taxpayers, your share would be $267,404.
You will find some more perspective on the enormity of the debt HERE.
“I, however, place economy among the first and most important republican virtues, and public debt as the greatest of the dangers to be feared.” – Thomas Jefferson
When I saw the news, I thought, ‘I feel like I just wrote an article about the debt crossing the $34 trillion mark.’
That’s because I did – on Jan. 4.
It only took the Biden administration seven months to add another $1 trillion to the debt.
Going back a little further, when Congress effectively eliminated the debt ceiling on June 5, 2023, the national debt stood at $31.46 trillion. Since then, the Biden administration has added $3.54 trillion to the national debt. That’s in one year, for those of you keeping track at home.
This isn’t shocking when you realize Uncle Sam is blowing through about half a trillion dollars every single month.
But this isn’t just a Biden problem.
Before the pandemic, the U.S. government had only run budget deficits of over $1 trillion four times — all by the Obama administration in the aftermath of the 2008 financial crisis.
The Trump administration almost hit the $1 trillion mark in 2019 and was on pace to run a trillion-dollar deficit in fiscal 2020 before the pandemic, even as the U.S. supposedly enjoyed the “best economy” ever. The economic catastrophe caused by the government’s response to COVID-19 gave policymakers an excuse to spend with no questions asked and we saw record deficits in fiscal 2020 and 2021.
“No pecuniary consideration is more urgent than the regular redemption and discharge of the public debt. On none can delay be more injurious or an economy of time more valuable.” – George Washington
The entire U.S. economy is built on debt. This chart tells you everything you need to know.
According to the National Debt Clock, the debt-to-GDP ratio stands at 122.55 percent. Studies have shown a debt-to-GDP ratio of over 90 percent retards economic growth by about 30 percent.
“The principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.” – Thomas Jefferson
It’s a Spending Problem
Democrats will try to tell you this is a tax problem. Ring a little more out of the billionaires and everything will be fine.
To give you an idea of how well the Treasury is doing, in April, Uncle Sam ran a surplus thanks to tax day. Tax receipts came in at $776.2 billion in April, a 22 percent increase over last year.
This blows apart the notion often bandied about that the deficits are because of tax cuts. The real problem is on the spending side of the ledger.
Through eight months of fiscal 2024, the federal government has spent a staggering $5 trillion. That’s up 8 percent over the same period last year.
And there is no end to the spending in sight.
Outlays continue to increase despite the [pretend] spending cuts and promises from the Biden administration that it would save “hundreds of billions” with the debt ceiling deal (aka the [misnamed] Fiscal Responsibility Act).
This reveals the ugly truth. No matter what you hear about spending cuts in Washington D.C., the federal government always finds new reasons to spend more and more money. Whether it’s a disaster, an emergency, or somebody else’s war, the spending train never reaches the station.
“Armies, and debts, and taxes are the known instruments for bringing the many under the domination of the few.” – James Madison
The Interest Problem
Politicians and pundits will keep kicking the debt can down the road as long as they can. But the road is getting shorter.
Interest on the debt is overwhelming the federal budget.
The federal government spent $140.2 billion paying interest on the national debt in June alone. That was just over 30 percent of the month’s total tax receipts.
So far in fiscal 2024 (as of June 30), it paid $867.7 billion in interest expense. That is a 33 percent increase over last year.
So far this year, the federal government has spent more on interest than it has on national defense ($644 billion) or Medicare ($629 billion). The only spending category bigger than interest is Social Security.
And interest expenses will only continue to climb.
Much of the debt currently on the books was financed at very low rates before the Federal Reserve started its hiking cycle. Every month, some of that super-low-yielding paper matures and has to be replaced by bonds yielding much higher rates.
Anybody who says “deficits don’t matter” is deluded.
And the only way out of this fiscal death spiral is significant spending cuts and/or major tax hikes.
“I can scarcely contemplate a greater calamity that could befal this country, than to be loaded with a debt exceeding their ability ever to discharge. If this be a just remark, it is unwise and improvident to vest in the general government a power to borrow at discretion, without any limitation or restriction.” – Brutus
Mike Maharrey is a journalist and market analyst for MoneyMetals.com with over a decade of experience in precious metals. He holds a BS in accounting from the University of Kentucky and a BA in journalism from the University of South Florida.
(Mike Maharrey, Money Metals News Service) Did you know the Fed has already loosened monetary policy? While everybody focuses on the prospect of a Federal Reserve interest rate cut and salivates in the hope of easier money, most people completely ignore the other prong of central bank monetary policy – the Fed balance sheet.
Well, it might be a sideshow, but it’s one worth paying attention to.
In May, the Fed quietly announced that it would begin to taper balance sheet reduction.
The balance sheet serves as a direct pipeline to the money supply. When the Fed buys assets – primarily U.S. Treasuries and mortgage-backed securities – it does so with money created out of thin air. Those assets go on the balance sheet and the new money gets injected into the economy.
Before the 2008 financial crisis and Great Recession, the balance sheet was just over $900 billion. By the end of the pandemic era, it stood at just under $9 trillion.
In other words, the Fed pumped over $8 trillion into the economy in 14 years.
During the pandemic alone, the Fed expanded that balance sheet by nearly $5 trillion.
Warsh outlined the effects of this unprecedented monetary expansion.
“The monetary base is up 60 percent since the pandemic. Another measure of money, M2, is up 36 percent in the past four years. The inflation surge in the same period– cumulatively about 22 percent– shouldn’t have been a surprise.”
If expanding the money supply is inflationary, it logically follows that to truly beat down price inflation, the Fed needs to shrink the balance sheet. Rate hikes aren’t enough to ring all the liquidity out of the economy. Walsh made this very point in his op-ed, explaining that if the Fed is serious about taming inflation, it needs to significantly reduce the size of the balance sheet. In other words, it needs to undo the money creation of the past decade-plus.
I didn’t.
And it won’t.
The Fed did make a half-hearted effort to shrink the balance sheet. Since the pandemic peak, the central bank has run off about $1.76 trillion. That sounds like a lot until you remember that it added almost $5 trillion in just two years.
And now the central bankers at the Fed have already started tapering the balance sheet.
The plan wasn’t exactly ambitious to begin with.
The Fed announced a balance sheet reduction plan in March 2022 when it could no longer convince everybody that price inflation was “transitory.” It called for $30 billion in US Treasuries and $17.5 billion in mortgage-backed securities to roll off the balance sheet in June, July, and August of 2022. That totaled $45 billion per month. The Fed said it would increase the pace to $95 billion per month in September 2022, capping the U.S. Treasury roll-off at $60 billion.
If the Fed followed the blueprint, it would take 7.8 years for the Fed to shrink its balance sheet back to pre-pandemic levels.
That doesn’t even begin to account for the inflation it created after the 2008 financial crisis.
So, if inflation isn’t at the 2 percent target why did the Fed start winding down balance sheet reduction in June?
Probably because they learned their lesson in 2018.
When then-Fed chair Ben Bernanke launched the first round of quantitative easing (QE) at the onset of the Great Recession, he assured Congress that the Fed was not monetizing debt. He said the difference between debt monetization and the Fed’s policy was that the central bank was not providing a permanent source of financing. He said the Treasuries would only remain on the Fed’s balance sheet temporarily. He assured Congress that once the crisis was over, the Federal Reserve would sell the bonds it bought during the emergency.
That didn’t even begin to happen until late 2017. And it abruptly stopped in the summer of 2019 having made very little progress in keeping Bernanke’s promise.
Why?
Because the monetary tightening was about to break the economy and the financial system.
The stock market crashed in the fall of 2018 and there were recession warning signs flashing in the economy. The Fed put rate hikes on hold in December that year and started cutting rates in 2019. In August 2019, the Fed reversed course on balance sheet reduction and launched a new round of quantitative easing as the short-term lending markets went haywire. Fed officials refused to call it QE. They even denied that it was QE. But whatever you want to call it, the result was the same as QE. The balance sheet began to expand again.
The Fed was able to shrink the balance sheet more this time around because the monetary expansion was bigger and faster during the pandemic than it was in 2008. But the central bankers know they’re playing with fire. They know that this economy can’t run without easy money. And that’s exactly why they’ve already slowed their roll even though they continue to claim inflation isn’t dead yet.
Keep this in mind as you digest all the talk-talk-talk surrounding the July FOMC meeting. The mainstream talking heads and the markets will focus on “will they or won’t they” cut rates. But the Fed has already loosened monetary policy. And it wasn’t all that tight to begin with.
And I wouldn’t be surprised if we don’t see quantitative easing back on the scene in the near future. The national debt just eclipsed $35 trillion. Uncle Sam is going to need the Fed to get back into the Treasury buying business to support all of the borrowing.
So, what’s the bottom line?
The Federal Reserve has already waved the white flag. It has surrendered to inflation.
That means you’re getting more inflation.
Be prepared.
Mike Maharrey is a journalist and market analyst for MoneyMetals.com with over a decade of experience in precious metals. He holds a BS in accounting from the University of Kentucky and a BA in journalism from the University of South Florida.
