In the macroeconomic, money and markets segment of this week’s Money Metals Midweek Memo, Mike Maharrey on Tether and crypto. That includes taking on the Federal Reserve’s role in fuelling inflation and enabling government spending. He asserted that the Fed acts as the engine of big government, facilitating what he termed the “largest spending spree in world history.” Maharrey contended that it is the expansion of the money supply that is causing inflation. He ruled out external influences such as tariffs and trade policies, calling those small potatoes.
Maharrey’s comments come at a moment of unprecedented public interest in the inflationary state of the economy and the future stability of the U.S. dollar. To bolster his arguments, he made powerful historical comparisons. Specifically, he pointed to President Franklin D. Roosevelt’s Executive Order 6102 of 1933 that mandated Americans turn in their gold assets. The economic impact of this order is that in response to this order, the dollar was heavily devalued. Effectively, the official price of gold increased by 40%—from $20.67 per ounce to $35.
As Maharrey explained, this major historical debacle is a reminder of what happens when the government meddles with the creation of currency. He posited that contemporary monetary practices, particularly the Federal Reserve’s quantitative easing strategy, mirror those of Roosevelt’s era. The Fed’s plan to respond with even more monetary expansion is to buy U.S. Treasuries, which will be purchased using freshly minted dollars.
The Role of Monetary Expansion in Inflation
On day one of his talk titled Stopping Inflation, Maharrey made it clear that monetary expansion fuels inflation. He pushed back against the conventional wisdom that attributes high prices to tariffs and protectionist trade policies. He pointed out that services are not subjected to tariffs, suggesting that blaming trade for inflation overlooks the true culprit: increased money supply.
“Inflation is an increase in the quantity of money and credit. Its chief consequence is soaring prices. For this, the government’s monetary policies are entirely responsible.” – Henry Hazlitt
Maharrey’s assertion aligns with economic definitions of inflation, which illustrate that it stems from an increase in money and credit rather than external trade factors. He urged listeners to shift their focus from tariffs to the broader implications of monetary policy and its impact on everyday prices.
That conversation brought to light some new data regarding the Federal Reserve’s activities. Between the Great Recession and COVID-19, it bloated its balance sheet by almost $9 trillion. Even more important are the long-term questions this surge creates about what is likely in store for the dollar’s value and purchasing power.
Historical Context of Currency Debasement
Maharrey delved into historical precedents for currency debasement, finding surprising similarities between today’s practice and the historical events. He pointed out that governments have historically inflated their currency to make their ends meet. From Rome to Roosevelt, and now to today’s Federal Reserve, he gave historical and contemporary examples.
He cited Iran’s recent experience with the same issue as a helpful case study. It reflects a much broader phenomenon of monetary debasement that knows no geographical or historical bounds. This trend reveals a pattern where governments manipulate currency values to address financial crises or fund expansive programs.
Maharrey’s points show the deep, toxic cycle of stimulus. Lesson after lesson, government and generations choose to disregard history, leading to tragic and preventable outcomes. The comparison serves as a reminder that the strategies used by modern central banks have deep roots in financial history.
Call to Action for Financial Awareness
Given these observations, Maharrey urged the audience to get active to protect their wealth. He lobbied for building up a reserve of sound money as protection against the threat of perpetual monetary debasement. One, he raises the alarm about the myriad ways that government policy can go wrong. Helping people become better stewards of God’s wealth is Jonathan’s mission in life.
He emphasized the importance of understanding that “monetary debasement is not going to stop,” urging individuals to consider alternatives such as precious metals through platforms like Money Metals Exchange. The idea is to move away from cash and currency toward physical and intellectual property capital that preserves worth as money standards rise and fall.
The debates over inflation and monetary policy in general remain a moving target. Maharrey’s view represents an important counterpoint, calling for a more classical perspective to always remain watchful against possible overreach in government monetary behavior.