 Welcome, ladies and gentlemen. It is a real pleasure to be here today. Great traffic coming up. This facility is just amazing, so it's just absolutely wonderful and great to be with all of you here today. I hope you feel like I do about this event and about the Institute's programs in general. And that is except, of course, when we turn ourselves our attention to the news of the day, the media of the day. You know, and I shouldn't be surprised, right? You know, being up here on stage, you know, this is what I do for a living, so when I pick up the Wall Street Journal or I'm listening to Bloomberg, I should realize that I'm going to be fed a story about the economy and about fed policy and all of that. So you think that, you know, if I'm up here on stage, I should know what I'm doing and I shouldn't be surprised at the news. But tell you the truth, ladies and gentlemen, it makes me feel like Chris Rock. Now my talk today is on the Fed and how COVID unleashed the Fed. But I want to state the basic premise, the basic conclusion of my talk, which is that the Fed is the single cause of inflation. They are the ones responsible for causing inflation. And that is their goal is to increase inflation. Now, of course, they don't want consumer price inflation, but that's the inevitable result of them printing up essentially printing up trillions of dollars of new money and injecting it into the economy and in effect handing it out to their friends and to the government. But we have known. We have known for well over 400 years since the Spanish came to the new world and brought back all the gold and silver that adding new money into a monetized economy doesn't really do the overall economy any good. It changes the numbers and it read it. We're gonna see it redistributes wealth in society, but it doesn't do any good. I mean, that was the first real lesson of economics by the Spanish scholastics and then later the European Enlightenment Economist, David Hume and the philosophers, they all knew that any amount of money was good enough for an economy. You didn't have to increase it. It didn't need to be expanded. It could be, but it didn't need to be the mercantilist of the 14th, 15th, 16th, 17th centuries and really right on up to today. They thought that money was wealth. The more money you could accumulate, the more wealthy you work. But economics. If it's done one thing and it's done it for a long time, it's that increasing the money supply is not necessary and it's actually very bad for the economy. And I want to review some of the bad things because we're just gonna be talking about what the Fed's been doing. But what's the ultimate impact? Okay, the first thing I've already mentioned is price inflation. This is what gets reported in the consumer price inflation that you may hear about or read about. Obviously, it's been in the news lately given that the consumer price index is up 7% over the last period over the last year. But Austrians look at a lot of different prices, not just consumer prices. We look at land prices, real estate prices, stock and bond prices, wage rates in all the various professions. We want to know what's going on economy wide, whereas the Fed, the government and the mainstream media want you fixated on that consumer price index. The second thing that the Fed does in manipulating the money supply and the interest rate is it causes the business cycle. Now, if you're reading about the Fed and the economy in the mainstream media, they're always talking about fixing the business cycle or controlling the business cycle or alleviating unemployment, things of that nature. But they're at a fundamental level. They're the ones that causes this instability in our economy that causes the booms and the busts. And finally, of the three major things that the monetary inflation from the Fed causes is it redistributes wealth from the productive productive sector and the productive people in economy to the government and to their friends. Basically, when the Fed is in the business of printing up money, it's basically buying up the government bonds where our government has gone into debt. And they're just electronically printing up money to taking that government debt off of the table. And it allows government to spend more money than they otherwise could through taxation. So as we're preparing our taxes and getting mad about the whole thing, we don't actually see the full bill of government because it's borrowing trillions of dollars every year trillions of dollars. The CPI that I mentioned just a minute ago is really the ultimate effect. So the money goes into the government. The government spends it on itself. It spends it on its contractors. It spends it on its friends. And so it gets to spend the money first and then as the money trickles down through the economy and it ends up in our pockets one way or the other. And we start to spend it. That consumer price inflation starts to go up. So that's really the last and ultimate thing. And it misses the whole story of what's going on because they're only looking at these general aggregate statistics like CPI, gross domestic product, the unemployment rate and things of that nature. Austrians always look at the statistics underneath these aggregate statistics so that we can tell or at least have some insight into the direction that the economy is and where it's heading. Now I want to talk about the Fed as a confidence game. Now this is something that actually they actually use this phrase. There was there's a big article in the Atlantic magazine about the Fed going into the COVID crisis and what they thought and what they expected and what was you know what was at risk and how they needed to restore confidence. And when you when it's put that way restoring confidence, it sounds like a good thing, but it's actually just a scam. It's actually just a scam that's perpetuated onto the American public on an ongoing basis for now over a century. Austrians have looked into this aspect of the Fed looked at it critically and you know basically Larry White an Austrian economist published an article where he looked at the Federal Reserve's influence on economic research. And what he found was that virtually all of the leading macroeconomist and monetary economist in the economy were all on the Fed's payroll. They were at either working at the Fed or they held temporary positions at the Fed or they were a member of the Fed leadership or they were they were leading people in terms of editing the leading academic journals. So they have a stranglehold on academic research as far as most people would see about the economy and he published that in 2005. George Selgen with straps and Larry White also published an article on has the Fed been a failure and they used the weakest possible criteria and they found that the Fed still was a failure over the previous regulatory regimes and other national central banks. And of course on Mises.org we published something almost virtually every day about the wayward activities of the Federal Reserve. Their failures, their misguided policies and their misguided statements about the economy. I put a lot of those together in the third item. The Federal Reserve is a confidence game which I gave in 2010. It was updated and published in 2016 in the quarterly review of Austrian economics and I looked at what the Fed was saying. They're published statements right. What they told the public and basically in 2007, which is the year between the housing bubble in 2006 and the financial crisis in 2008 and in 2007 they said that everything was great. That all of these new all this new financial engineering mortgage backed securities credit default swaps all of that was great. And they were telling that to conventions of the people who manage the people who manage your funds. So I've come to believe that whatever the Fed says, whatever the Fed does, yes, it's designed to build confidence, but that confidence is misplaced. It's really a confidence game meant to dupe you out of more and more of your hard earnings, hard work and accumulated assets. Now, in a lot of this, you know, it's an I'm talking about history here and I'm going to be specifically talking about 2019. But all of this stuff is eerily the same as it is right now. So it might get a little confusing there. But in general, the Fed wants to be seen as an inflation fighter. And the Fed is now fighting inflation. If you listen to the news about the economy, the Fed is talking about tapering and tightening and normalizing raising interest rates, you know, all of this talk. And in more recent days, it's actually about things like, Well, this Fed president says he wants to raise it a quarter percent interest. And this fellow in the president in St. Louis wants to raise it a half a percent. And somebody, another president wants to raise it a full percent. So we're getting bombarded if you're listening, which I'm not necessarily recommending. But if you are listening, that's what they're telling you. They're telling you they're really concerned. They're really hard at work. And they're going to tighten no matter what happens to their own personal reputation. So it's tough talk. But that's all it is. You know, one of the things we're also here today is that, Well, the Fed has to tighten because Russia is causing the inflation. Okay. Little teeny Russia. It's big in terms of land, but it's not that big of an economy. It's not well integrated into the world economy. It's basically a raw material producer, mining oil, that sort of thing. And yet the Fed and the mainstream media media is blaming our inflation on Russia. Now, that's easily disabused. If you go to look at the charts of raw materials, you know, grains and meats, metals, you know, sugar, coffee, cotton, all of those charts, what you'll see is that Russia is hardly a blimp on those charts. In other words, they're already looking like this so that the price of all of the raw materials in our economy, say the top 40 top raw materials, they're all looking like this. They've all increased over the last two years by 60, 80, 100%. And then at the very end, you can find some charts since the Russian invasion, where the price of something has risen really noticeably. It's not on that trend anymore. So oil prices have risen above the trend and wheat prices have risen above the trend. And for all those nickel consumers out there, yes, nickel has risen above the trend, but all the rest of them are either on trend or below trend. So if you look at the facts, Russia essentially has done little to add to the inflation that we feel, the inflation that we drive by at the pump. I also want to mention the 2% target, which has been fed talk for a long time. You know, the Fed has been below target for several years now. And they're worried about getting to the target and, you know, regular people like us are wondering, well, why do they why are they worried about getting inflation up to a certain level? Well, that's because it benefits the Fed. It benefits the government, but it's absolutely not necessary that the Fed generate 2% CPI inflation. That whole idea of a target dates back a few decades. When inflation is really high in a lot of countries around the world and central banks innovated by with this 2% target. And they would say, you know, I know our currency is a mess, but we promise you not to go above 2% inflation. And it took them many years to get it down to 2%. But the whole purpose of the target was to con us into thinking that all these central banks had sworn off inflation that they had sworn off depreciating their currency. And then they found themselves below it. And they've been fighting to get above it ever since. And the whole narrative has basically changed. Now, we almost got back to normal. In 2019, the Fed told us it was going to return to normal. It said that it was going to raise interest rates, that it was going to taper its quantitative easing program. Taper means that it was going to reduce its quantitative easing, which meant that it was going to buy fewer assets out of the economy. And so we got a lot of talk about this return to normalcy almost daily. It was talking about, you know, tightening and returning to normal, you know, things of that like that. In the pre COVID days, as the COVID numbers started to tail off, they needed a new playbook. And that playbook was a return to normal. But that didn't last very long. They got very nervous almost as soon as they started this return to normal policy, they became very, very nervous. And one thing that happened in 2019 that I was noticing was that the help wanted ads in 2019 were increasing at a very high rate. Okay. And they were increasing throughout the year, which said, not only is the economy returning to normal, but it was looking like it might be quote, overheating in terms of people getting better jobs, you know, we can't allow that for people to get jobs and to get better jobs. And so the Fed didn't like that. And we actually got a peak in help wanted ads in December of 2019, which goes hand in hand with the fact that we got a new record. Just this past week in new job openings in the economy. Back in December of 2019, the new record was 7.3 million. The new record this past week was over 11 million jobs out there available being advertised. But underneath that help wanted aggregate number. There was a couple of important micro numbers and one that I keep an eye on is the number of help wanted ads in the mining and timber industry. And mining and timber is kind of like the start of economic production. Okay. So you need, you know, things dug out of the earth and trees cut down, crops grown, that sort of thing. Everything we basically consume is ultimately made with the assistance or actually made from the stuff we dig up, the stuff we cut down and the stuff we plow and plant and harvest. And that number peaked earlier in July of 19 of 2019. And then subsequently it fell by 72%. So there was rumblings underneath the economy that things weren't as good as they might have appeared. And then we got an inverted yield curve in the economy in August of 2019. And an inverted yield curve is just simply the fact that short term rates in the economy, say, alone for one year or two years or a bond for one year or two years is paying a higher interest rate than alone or a bond that's of a 10 year duration or a 15 year duration. So it's basically when short term rates rise above long term rates and that's a signal that a recession is on its way. This is very much the help wanted stuff is typical and normal in a business cycle. The inverted yield curve is typical and expected in a business cycle in a market economy. So this was not dire news. This was expected news. In other words, if the Fed is supposedly tightening, yes, the economy is is going to show it's the bad investments that were made during the boom. And then in September of 2019, there was a problem in the money market, money market funds and just short term borrowing and lending in the economy. Um and there was a big spike in the interest rates on that short term money. As a matter of fact, the the the feds target at the time for short term money was 2.4%. And we'll look at that historically in just a minute, but their target at the time was 2.4%. And then all of a sudden, because they don't actually control everybody in this marketplace, there was a jump up to over 5% in this market. That was unexpected. It went totally against the feds playbook. Uh and they were scared basically, but it wasn't really unexpected. It was just simply a case where the supply of loanable funds by the fed and in the market was falling and the demand for loanable funds in the market was rising. And so naturally you get spikes in the interest rate. So all three of those things and there's others were expected and normal. If you understand the fact that the fed causes a business cycle and that every boom is going to be followed by a bust or recession. But the fed panic. It acted quickly. It acted aggressively. It bought government bonds and other bonds in massive amounts of money. Uh, buying bonds means that banks have cash. They cut interest rates. Um, and this is all pre COVID. Okay. So this is not in other words, the fed is already panicking at this point before anybody, at least anybody in here knew about COVID. Um, we're talking about 2019. And then when COVID hit, uh, the government subjected us to what I call triple whammy. Um, and you know, the actual COVID response was something that was way over the top. Uh, you know, and I would say it's aggressive, unscientific and frankly on American. Uh, and then there was the government's response to the economy under COVID conditions, which was also massive. Trillions of dollars, uh, which was, you know, on the face of it, very uneconomical. And of course, it was all borrowed against the future. So this was a sort of a double poison that the fed, uh, in the government had injected into our economy. And what I'm going to concentrate here for a few minutes is on the fed response, which was enormous, um, and dangerous and unprecedented. The first thing I want to look at is those interest rates. Um, and put it into historical perspective. Okay. This is the federal funds rate, the interest rate that banks lend to other banks on a short term basis. And if we come all the way over here, this is, uh, 2020, uh, in 2021. And basically they've brought interest rates in March of, uh, 2020 down to zero. Okay. After a very small tightening period or policy, you know, they wanted to return us to normal, but policy never got back to normal. They flinched. They panic. Uh, as a matter of fact, the tightening, uh, only got up to about 2.4%, which is actually less than all of the loosening cycles of the fed in the last 40 years of the 20th century. So that's how far out of context, out of reality, the fed is taking us, uh, and our economy and brought us into this new era of low interest rates and a hyper expanding, uh, monetary system with extreme policies. Uh, and actually a lot of things that are hard for me to explain. I mean, we've also we have experience. For example, um, things like negative interest rates and a normal person would say, Well, how do you get negative interest rates? Uh, or even better, we had a period where we had negative oil prices. Okay. Now you try to explain that to your freshman. Yep. You can get a, you can get a barrel of oil for negative $31. Um, and so that's the kind of thing. Um, that's the new era that we find ourselves in here where back here, uh, 1964 are at least our coins still had a silver content to them, right? And now we go over to here and even though we took the copper out of the penny, the penny actually has a melt, a monetary melt value greater than a penny. So if you could melt a penny down, you'd get six cents of metal. And if you could melt a nickel down without getting thrown in jail, they're worth about eight cents a piece. So that's how far away from reality, uh, we've got. And now the money supply where you really see the panic on the part of the Fed. This only looks at, uh, 2016 to the present. And basically they've got the money supply here increasing substantially up until we get to the COVID crisis. And then there's a massive increase in the money supply during that period is the Fed just dumps essentially electronic cash into the market in that Atlantic article. It goes into great detail about that the only solution to saving the world to keep, you know, the earth moving through the sky was unlimited cash, unlimited cash. That was the only thing that could have possibly saved us. Of course, it didn't save anybody in here, but it did say the Fed and the government, the debt holders, the banks, all of that. So we had this massive, very quick increase never before seen. So where you and I might not even notice trouble in the economy, the Fed was so panicked that they increased the money supply by a huge amount, trillions and trillions of dollars. And then, yes, this trend line afterwards, it has a upward, uh, a higher upwards slope, basically. And all throughout this period, uh, over here before 2016, we have quantitative easing one quantitative easing two quantitative easing three, uh, and then quantitative easing four. And that sounds nice. The first thing that came into my mind was QE, the Queen Elizabeth, you know, it's like, is this a, is this a free ticket for a cruise on the Queen Elizabeth? Well, it turns out in the long run, no, it's more like third class steerage tickets in the Titanic. So this is huge. Um, and it's quantities of money that are beyond our understanding almost. And on top of that, not only has the Fed become, uh, the largest holder of our government debt, but it actually now because of this quantitative easing policies has been soaking up mortgages to the tune of the fact that it is now 25% of the entire mortgage market in the United States. So you may go to a bank and take out a mortgage or you may go online and take out a mortgage, but one quarter of all those mortgages end up on the banks on the books of the Fed. And, uh, speaking of their books, this is the balance sheet of the Fed, uh, from 2003 through the present, um, you know, how many assets does it own? And in order to increase the supply of money, basically the Fed buys government securities. Now it buys mortgages and a bunch of other stuff. Central banks are have already, uh, been buying stocks in stock markets to keep stock markets afloat, uh, as well, particularly Japan, which is by far the largest shareholder in all of Japan. So the balance sheet 25 years ago was more like $300 billion. And in recent years, it's been less than a trillion. And then the housing bubble, we saw that first quantitative easing mode. It doubled the balance sheet of the Fed, and they just continued on basically buying more and more assets, dumping more and more money or liquidity into the economy. And it wasn't until we get over to 2018, well before COVID that they started shedding some assets from their balance sheet. And this is when they panicked. So this little bit of deleveraging its balance sheet sent it into a panic where it quickly expanded the money supply with unlimited cash. And then when COVID hit, it increased the balance sheet to $7 trillion. So in less than a decade, we've gone from less than a trillion to over 7 trillion. And then we've been with these monthly purchases here of agency bonds, government bonds and mortgage backed securities have taken us all the way up to the $9 trillion level. So what the Fed is planning next, it's hard to tell, but it doesn't look good. And but they're going to continue on this same path unless we can stop them. Thank you.