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The Economic Sh*tstorm Coming is Due to Reagan's Deregulated Economy

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In addition to an economy held together with the baling-wire of Fed stimulus (that's ending), both the US & the world are facing a wild spectrum of assaults that could have huge economic impacts

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The CEO of America's largest bank is worried, and for good reason.

Yesterday the Fed started something it hasn't done for quite a while. It started dumping bonds.

The Fed has been goosing the economy steadily since the Bush Crash of 2008, buying US and corporate bonds with money it creates out of thin air (only the Fed can "print money" like this by simply willing the dollars into existence).

By purchasing and holding those bonds over the past 14 years, the Fed has created and then flushed into our economy $8 trillion in liquid cash. This is how the Fed stimulates an economy in crisis: pouring newly-created money into the system.

As a result, our economy has been running on high-octane sugar-high stimulus (free money from the Fed, as you can see above) ever since 2008.

Several trillion of that came in the last year of the Trump presidency. While Republicans scream about spending for social needs that might also stimulate the economy, they and Trump were quite happy to see that money from the Fed.

But now the Fed and it's Trump-appointed Republican Chairman, Jerome Powell, are backing off.

Yesterday the Fed started selling those bonds, reversing the process after 14 years and now sucking money out. Instead of stimulating the economy, they're trying to slow it down in the hope that will cool off inflation.

When they receive the money back from those sales they'll simply drop it into the same Schrà dinger's Cat-box from which it came: it'll vanish into the icy, dark depths of fiscal interstellar space, never to be seen again. What the Fed creates, the Fed can dissolve.

This month the Fed expects to "retire" $47.5 billion from its balance sheet "- retire that amount from our economy "- rising to $90 billion a month by the end of the summer.

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Thom Hartmann is a Project Censored Award-winning New York Times best-selling author, and host of a nationally syndicated daily progressive talk program on the Air America Radio Network, live noon-3 PM ET. His most recent books are "The Last Hours of Ancient Sunlight," "Unequal Protection: The Rise of Corporate Dominance and the Theft of Human Rights," "We The People," "What Would Jefferson Do?," "Screwed: The Undeclared War Against the Middle (more...)

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