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Monday Humor? Fed "Tired Of Waiting For Inflation" - Plans To Give Every Household...

• http://www.zerohedge.com

DISCLAIMER: this essay was written in the spirit of April Fool's Day.

Authored by Charles Hugh-Smith via OfTwoMinds blog,

The basic idea is that giving each household, regardless of wealth or income, $1 million each will spur consumption so mightily that inflation will skyrocket.

The Federal Reserve has been trying to boost the official inflation rate for eight long years, and apparently patience with current policies is finally wearing thin. Rumor has it that the Fed is readying a new "nuclear option": distributing $1 million to each household in the U.S.

The Fed can create any sum of dollars it chooses with a few digital keystrokes. An unidentified source at the Fed reported, "The handheld calculators at the Fed only have 12 digits, so there's a bit of confusion about how much money we'll have to create to give $1 million to all 100 million U.S. households. The consensus answer is $100 trillion, but they're putting the numbers into the current econometric models to verify this."

The basic idea is that giving each household, regardless of wealth or income, $1 million each will spur consumption so mightily that inflation will skyrocket. "What the Fed has wanted for eight long years is to generate an expectation of inflation," our source explained, "so that consumers will spend whatever cash or credit they have now, knowing that it will buy less in the future."

Once people expect substantial inflation, they realize the best course of action is to borrow as much money as possible now before interest rates rise--an inevitable consequence of inflationary expectations.

They also realize it's best to buy whatever you can now before the price rises next month.

"The advocates of this program see asset prices leaping higher," the source said. "Why would a seller of a house asking $500,000 before ther giveaway maintain an asking price of $500,000? of course the price will immediately jump to $999,000."

Debt repayment becomes much easier with $1 million in cash. The source iside the Fed noted, "Imagine how much money the federal government is about to lose in student loan defaults. With $1 million in cash to each household, naturally the government will deduct any student loans, overdue taxes, penalties and so on up front. The banks will love this and so will the federal, state and local governments."


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