A Creek, to a Flood, to a Desert

By Paul Stone

Odds are you’ve been severely negatively impacted by the visions and decisions of our government on a daily basis. Many times, the government’s intentions are well meant… at least at first blush. However, if these ideas had been proposed to us laypeople, I am certain we would have rejected them from going into effect.

Here’s an easy one, while Bill Clinton was president, he answered the call by many to help the less-than-perfect-credit worthy folks get home loans. I’m sure the original idea was some program pushing on lending facilities to lower their standards - use some kind of matrix requiring them to force loans in their basket of borrowers to help out.

What became of this idea was lending facilities being able to lend ten times the amount of money the facility was sitting on. So, if you had $100,000 on deposit, that firm could lend 10x $100,000 or $1,000,000 which is one million dollars that doesn’t exist anywhere…all the financial centers that could lend for home or car loans could ‘print money’.  A Niagara Falls amount of artificial money pouring into the economy daily from back in the 1990’s.

Of course, home prices began raising to the ozone layer….and soon most people can’t afford the mortgage payment to own a home. The dollar value in your paycheck suffered, the cost of living rose incredibly, and the dream of owning the ground you sleep on vanishes.

Before Clinton’s decision, the average home price in America was $130,000. That is the price of a double-wide today in the desert.  The average home price today is almost 400% higher.

Let’s look at 2009, which is the year after all the fluff and falsehood inflated values in assets had been cleared out. You may recall hearing something about how nearly all the lending institutions needed an ungodly amount of money to survive. We literally do not have the words to illustrate how obscene an amount of money was needed to provide the lending world another day of life, to continue existing.

Remember how they make money – mortgages repaid with interest. Now, if they could process 1,000 loans a year for example before Clinton’s action, now they can make 10,000 loans a year, which is ten times the number of borrowers, and for easy illustration, 10 times the amount of revenue back to the lender…all from artificial money pouring into the financial world.

We all remember how Uncle Sam prevented the natural outcome of this massive piece to our financial world to die - which would have allowed citizens to get back to normal, genuine life on Earth. Instead, our government chose to come completely unhinged reacting to the economic famine that befell us in 2008. Because they must know better than us – what could we possibly know out here in the real world? It’s such a clusterf@#k!  Look below:

Let’s really study these elements being reviewed. Some of you reading this have seen your wealth skyrocket but most Americans perhaps 70% of us have been crushed by the government’s unwillingness to deal in reality.

Which brings me to the Federal Reserve - America's financial puppet master - pulling strings from 2009 to 2024 in an epic tale of economic wizardry. If you thought the Dow Jones’ meteoric rise from a what was likely a genuine value of 7,000 in 2009 to a staggering 41,000 in 2024 was some kind of miracle, think again.

This was no ordinary market recovery. It was a carefully crafted narrative, written by the Fed with a military-like printing press as its quill. By flooding the economy with trillions, upon trillions, upon trillions of minted dollars onto an Excel spreadsheet – out into the economy these unbacked dollars fly.

Back in the dark days of 2009, the U.S. economy was on life support. The stock market had dropped approximately 50%. Corporate profits measured at a genuine modest $850 billion annually. The national debt, while already hefty at $11 trillion, seemed almost quaint by today’s standards. The total value of the U.S. stock market was just $8.7 trillion, reflecting an economy that had been battered by the financial crisis.

Fast forward to 2024, and it is like stepping into a parallel universe. Corporate profits ballooned to $3.5 trillion a year, a fourfold increase that seems impressive until you realize it’s less about economic brilliance and more about the Fed’s money printing on steroids.

The GDP doubled too, from $14 trillion to $28 trillion over this period. On paper, this sounds like robust economic growth. But look closer, and you'll see that this "growth" was less about innovation or productivity and more about the Fed’s relentless pumping of liquidity into the system. This deluge of new money spurred borrowing, investment, and consumer spending. But much of it was like a sugar rush—a temporary high that masks the fact that real, sustainable growth was taking a backseat to financial engineering.

Now, let’s look at what this monetary magic trick meant for everyday Americans.

Gasoline prices didn’t just inch up; they soared from $1.86 in 2010 to $4.42 in 2024. That’s more than double, making every fill-up a painful reminder of how the cost of living has spiraled out of control. And eggs? Those humble, once-affordable breakfast staples? They went from $1.66 per dozen in 2010 to a jaw-dropping $6.30 in 2024. That's not just inflation—that’s breakfast robbery.

Housing, the cornerstone of the American Dream, also became a luxury item. The average home price jumped from $221,000 in 2010 to a staggering $440,000 in 2024. That’s a cool 99% increase, effectively pricing out a large chunk of the population. While the investing participants and the home flippers saw wild growth from this, the average U.S. household income barely increased from $49,000 to $78,000, that 37% bump is the element to find truth in all this.

How evil is it that from this flood of money from thin air into the economy, lifting many boats higher, capsized those of most Americans? This flood is drowning them. Simply put, if costs double, your income has to double or you’re drowning.  

Sure, you’re making a few bucks more, but it’s nowhere nearly enough to keep up with the skyrocketing prices. Rent? It’s a similar story, doubling from $1,083 to $2,100. So, while you might be bringing home a slightly fatter paycheck, you are also watching it evaporate faster than ever.

And if you're thinking of starting a family, better brace yourself. The cost to raise a child to 18 more than doubled, jumping from $226,000 in 2010 to a crushing $465,000 in 2024. It’s like kids are now made of gold, or at least priced as if they were.

Let’s not forget the elephant in the room: household debt. In 2010, Americans collectively owed $11 trillion - a hefty sum, no doubt. But by 2024, that figure ballooned to an eye-watering $18 trillion. It seems that while incomes barely budged, debt levels skyrocketed, with families increasingly relying on borrowing just to make ends meet.

So, what’s the takeaway from this wild ride? The Fed’s money printer went from a creek to Niagara Falls. Sure, the stock market soared to dizzying heights. But while the market was climbing, so was the cost of living, making everyday life increasingly unaffordable for the average American.

By 2024, while the Fed's policies inflated asset prices, they also left many feeling deflated as they grappled with the harsh realities of rising costs. Welcome to the land of financial whack-a-mole, where no matter how hard you hit, there is always another bill popping up.

For both camps - the ones who seemingly profited wildly from Niagara’s flow and those who have been crushed – need to understand, the resource the government has been releasing, the dollar itself, was once worth 100 cents that is no longer true.

Picture thousands of dollar reservoirs around the country - 100% full of dollars, they have been draining out into Niagara. Can that resource never run out? Duh, of course it can. Today those reservoirs hold only 3%. Yikes.

Mathematically speaking, Niagara is about to dry up. It’s logical, if not absolute, to then understand that all the lofty values deflate back to realistic levels  and all costs of things also shrink back.

The great the equalizer is around the corner - where those who think they are loaded with wealth lose it and those jealous they are not wealthy find they don’t need it for the cost of living resumes a level of affordability.

Its all about resources, the source of everything matters. If the source is genuine then those elements can be relied upon, built upon. If the source is falsehood, well then…

***If you want to argue with me go ahead. Comment. Let me know what you think. I read all the comments and I’m always hoping to learn something new