“Europe is already in recession,” he said. “Germany is still growing very, very slightly, but is likely to go into recession soon. Growth in the U.S. is also falling off. The U.S. economy has decelerated and I don’t see much growth in the next six to 12 months,” Faber said.
There’s also little the Federal Reserve and other policy makers can do to turn the U.S. economy around. “I think that if you look at the injection of liquidity and the intervention by the Federal Reserve and the Treasury with fiscal measures, it has already impoverished the U.S. economy,” he said.
It would take massive easing, a huge balance sheet expansion.
So what does massive easing, and huge balance sheet expansion mean? In plain English, the Treasury issues bonds (debt), the banks buy the debt which loans the government the needed money, and the Federal Reserve buys the bonds from the banks.
In other words, because of massive debt, we are borrowing from Peter to pay Paul.
The Federal Reserve created 2.8 trillion of this new money for two years calling it innocuous names like ‘stimulus’ and ‘quantitative easing’ or QE. We wrote about this easing program in August 2011, and since then US debt has grown from 15 trillion to 16 trillion. That debt is choking off the economy and causing the Fed to consider additional money creation.
The newly created money devalues the existing dollars and that causes us to constantly use more dollars to buy the same goods and services.
We go back to the simple fact that borrowing money is definitely not recommended by the Lord. In Moses words to the Israelites in Deuteronomy 15:6 “For the Lord your God will bless you just as He promised you; you shall lend to many nations, but you shall not borrow; you shall reign over many nations, but they shall not reign over you.”