Storm Over Fed Hyperinflation, Going Into Bernanke Testimonies This Week
February 26, 2013 • 11:30AM

The alarmed debate taking place in and around the top circles of the Federal Reserve, about the oncoming consequences of hyperinflation even from the banker's perspective alone, is the subject of another New York Times analysis Feb. 24. The first member of Congress has written a public letter to the Fed on the threatened destruction to the economy and the Federal Reserve Bank itself. Rep. Jim Jordan's (R-OH) letter to Helicopter Ben Bernanke demanded information on what he termed "the devastating consequences from any unwind" of the hyperinflationary spiral.

The Times revealed that the Fed in fact, in an internal paper in January, analyzed its own likely coming losses when it attempts to "exit" from quantitative easing: a record $40 billion if (10-year) interest rates then rose to 3.8%; but $120 billion if they rose to 4.8%. The latter loss would wipe out the Fed's capital, putting the bank into a condition known by the termus technicus, "Lehman Brothers". But "the Fed can afford to lose money because it can simply print more," points out the Times helpfully. This attempt to replace its own capital with its own printing press would be exactly the violent lurch from the first attempt to end massive money-printing, back into even more hyperinflationary money-printing, of which EIR's Dennis Small's widely circulated new video warns. It is also notable that PIMCO bond investor Bill Gross's shock column, "Credit Supernova," actually was posted back on Jan. 31, immediately after the close of the Federal Reserve FOMC meeting at which panic began to spread.

The Times piece may serve as a kind of signal to members of Congress, going into Bernanke's two days of "Humphrey-Hawkins Act" testimony, known as the monetary policy report to Congress: Tuesday in the Senate Banking Committee, and Wednesday in the House Financial Services Committee. The monetary state of the money economy is fearfully close to blowout.