The Tsunami of Printed Money Won’t Help ‘Affordability’

Open your wallet and remove a $20 bill. On the front, it reads: “Federal Reserve Note.” To understand the coming financial crisis, we need to trace the journey that bill took to reach your wallet. To accommodate the myriad ways in which the federal government subsidizes Americans, the Federal Reserve is about to unleash waves of new money. Things are going to get worse, not better. With inflation still too high, the Federal Reserve announced it will begin injecting another $40 billion into the money supply per month.

Like all money, the bill in your wallet was created to finance something the government wanted to fund. Congress is under pressure to extend Obamacare subsidies, for example. Only a heartless monster would deny basic health coverage to the most vulnerable Americans, we are told. People are going to die if the legislation doesn’t pass. What lawmaker wants the blood of poor Americans on his hands?

Missing from this conversation and every discussion about expanding government subsidies for Americans is the cost that the rest of America must bear. Subsidies increase prices. You don’t need an academic paper or a complex supply-demand equation. Just reflect on your lived experience. In all areas where the government has tried to help some Americans afford a good or service, such as education, healthcare, childcare, and even housing, subsidies have made those goods and services more expensive. Meanwhile, unsubsidized things that used to be luxuries, such as electronics, plastic surgery, and clothing, have all come down in price over time. When it comes to subsidies, consumers are better off without government help. 

Medical care, in particular, has spun out of control. With nearly 9 in 10 Americans receiving some form of government assistance, the cost of medical care has skyrocketed to the point that it’s almost completely unaffordable without continued growth of subsidies. Healthcare subsidies account for the single largest share of the federal budget, and their costs continue to climb.

On paper, the Federal Reserve is supposed to protect Americans from inflation and unemployment. In reality, it prints money to finance the government. Its activity is shrouded in mystery, but when you strip away complicated explanations about things like repo agreements and bond purchases, the Federal Reserve, is printing money to prop up federal spending, mostly on subsidies and interest on debt.

On Dec. 10, 2025, Federal Reserve Chairman Jerome Powell held a press conference during which he used opaque jargon to mask how desperate the situation has become and the extreme measures the Federal Reserve is now taking to prop up federal debt. The headlines screaming that the Federal Reserve is “lowering interest rates,” mask the lengths to which the Fed must now go to make interest rates follow its policy. The demand for U.S. debt has declined. This is because the combination of default risk and inflation has made the interest returns on government bonds unattractive compared with other investments, such as gold. The supply of U.S. debt does not match the demand for U.S. debt at the “price,” which is what an interest rate really is.

If the Federal Reserve were sticking to its mandate (lowering inflation, securing low unemployment), it would not have reduced interest rates, and it would not be adding billions to the economy. The Fed’s inflation target is 2.0 percent. Actual inflation is running at 2.8 percent, if you believe official statistics. Some think it’s much higher. The economy “will rise 1.7 percent this year and 2.3 percent next year, somewhat stronger than projected in September,” according to Powell. Unemployment is currently at 4.5 percent. On paper, the economy is doing great.

So, if you believe official statistics, it makes no sense that the Fed is now planning to buy $40 billion in debt at this time. By comparison, the Fed spent $80 billion per month following the worst financial crisis since the Great Recession. So this spending is approaching levels seen in a severe economic crisis. On top of that, the Fed is ending limits on “repo” contracts. These contracts, some suspect, are another way the Federal Reserve uses printed money to encourage third parties to buy and hold U.S. debt. Without those subsidies, the market would extract a much higher interest rate from the federal government. The debt has become so large that the whole system could buckle under even a modest increase in the interest rate.

Returning to your $20 bill: It was born when the U.S. Treasury withdrew money from the Federal Reserve to spend it on something. When that dollar leaves the government’s hands to pay a doctor, nurse, pharmacist, or insurance company, it begins circulating in the economy. There are 170 million workers in the United States. The average American worker makes $5,200 per month. When the Federal Reserve creates $40 billion to finance government spending, that’s equivalent to a $235 dilution per paycheck. It might not seem like much, but this dilution has a compounding effect. Those dollars find their way into grocery stores and pharmacies. They bid against you in the checkout line. Groceries prices increase and things like dry cleaning, auto repair, new cars, rent, and health insurance all get a little more expensive every time you go to purchase them. When the Federal Reserve prints money to subsidize the government, that erosion of purchasing power spreads through the economy.

At some point, $40 billion will not be enough. It will cost more and more money to subsidize federal borrowing, and inflated prices will accelerate the totals being financed. That’s the one thing we know about all subsidies. Alternatively, the debt crisis and/or hyperinflation could be delayed by a massive deflationary event like the 2008 Great Financial Crisis or the 2020 COVID-related financial crisis, both of which were used as an excuse for the Federal Reserve to buy trillions in debt using printed money. Yes, the government needs a massive shock to the system and large-scale unemployment to manage its debt crisis. Otherwise, the erosion of the dollar will accelerate, making life increasingly unaffordable for everyday Americans. Either way, the massive borrowing will cause misery for the working American.

When people say subsidies are about caring for people and compassion, they’re only looking at one corner of the bigger picture. There is no free lunch. When the government subsidizes something, it must take purchasing power from somebody else. Who speaks for the silent victims of these subsidies? What about working Americans who sacrifice their precious time and energy to provide for their own families? Their wages can’t compete with the Federal Reserve’s printing press. That money printing will cause some of these Americans to go without childcare or health insurance. Some must cut back on food, prescription drugs, or car maintenance. Who speaks for them?

https://chroniclesmagazine.org/web/the-tsunami-of-printed-money-wont-help-affordability