“In the past four years, the M2 money supply has increased 28 per
cent, which is 10 times the averaged growth rate. After 220 years of the
U.S.A.’s existence, the total public debt added up to more than $10
trillion. In his four years, Obama added more than $5 trillion to that,
so it now equals 100 per cent of gross domestic product. Here’s how it’s
done: when a country runs a deficit it sells government bonds to cover
its bills. In 2011, for example, only about 39 per cent of issued bonds
were bought by arms-length buyers (retirement funds and banks.) The
remaining 61 per cent were sold by the Treasury to the Federal Reserve
that, as part of the government, pays not with cash but notes. The
Federal Reserve doesn’t pay income tax; earned interest on the notes
goes back to the Treasury. In the private sector, this would be fraud—a
colossal Ponzi scheme.

“Inflation doesn’t look as bad as it is because of the bombed-out
housing market, largely the result of Bill Clinton’s 1995 changes to the
1977 Community Reinvestment Act. Those changes forced banks to give a
percentage of residential mortgages to people who couldn’t afford them.
For good measure, Fannie Mae and Freddie Mac
(government agencies privatized by President Lyndon Johnson with a
comfort letter from the government on their debt) were ordered provide
51 per cent of mortgages on a similar non-commercial basis. When this
jerry-built scheme to promote home ownership collapsed, the government
was left holding the bag for Fannie and Freddie. The political class of
both parties locked arms and blamed the whole fiasco on private-sector
greed. About the only person talking any sense on this is Paul Ryan who
actually understands fiscal policy.”