4. The Residue of Ben Bernanke

Today, 67% of all US debt needs to be refinanced within five years. This will significantly increase the annual interest costs on outstanding US debt. This situation was caused by Bernanke refinancing long-term debt that was coming due into short-term debt at a time of artificially low, induced interest rates to further reduce the annual interest cost of the debt. He referred to this strategy as 'twisting.'

Ben Bernanke's policy of printing money while maintaining artificially low interest rates was and still is unsustainable. It has directly contributed to recent bank insolvencies. The price of money is determined by the interest rate. In an open, unmanipulated market, it will fluctuate based on risk (higher risk leads to higher rates) and duration (the length of the loan).

Bernanke's policies were followed to a fault by Yellen and Powell for the first two years. However, since Congress has borrowed or approved borrowing of about 10 trillion in a little over four years, the debt has mushroomed, and Bernanke's policies have unraveled. This has left the Fed with annual losses of $90 billion, passing these losses on to taxpayers in violation of the Federal Reserve Act. The banking system has also erased most of its equity due to Bernanke's artificially low interest rates for 14 years, and individuals are dependent on elevated Fed interest rates that are unsustainable in an attempt to keep up with inflation.

It is likely that the ten-year government bond will rise to 5.25% soon, giving stiff competition to holding stocks.

Wishing you a blessed week,

Tony Christ