Listening to the political class, one would think that the federal deficit has been slashed to the bone. But the truth, as revealed in a must-read article on the Wolf Street Blog is the federal deficit is growing and will continue to grow in the future. The article identifies the key role the Federal Reserve plays in making it possible for Congress to continue to run up the national debt:
The Fed has been the enabler. After years of QE, it currently owns $2.45 trillion or 14% of the gross national debt, in addition to a couple of trillion in other securities. The Fed’s asset purchase binge with newly printed money allowed the US government to go on a borrowing spree and blow this money. There have been some big beneficiaries: Wall Street, the corporate elite, Warren Buffett in particular through the bailout of this financial and insurance empire, the military and intelligence complex, and others. And there have been millions of small beneficiaries: people receiving federal subsidies of some sort. But for the economy, which is going to have to pay for this debt one way (taxes) or the other (inflation), it has been a slog.
The Fed's role in facilitating deficit spending that drives the increase in government in all areas in one more reason why it so important to Audit the Fed.
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PDFTags: Audit the Fed