Horowitz: As central banks accelerate twin banking, inflation crises, time to revisit role of the Fed

So much for “no bailouts.” It turns out we are on a trajectory to make the 2008 financial bailouts look like child’s play.

Last week, banks borrowed $164.8 billion from the Federal Reserve in the face of the liquidity crisis affecting the security of deposits across regional banks. For comparison, during the most acute phase of the 2008 financial crisis, banks tapped $110 billion in short-term emergency loans the Fed refers to as the “Discount Window,” which is slightly less than last week’s run, even adjusted for inflation. Guess what this means? After a brief hiatus of less than a year, we are headed back into the era of printing more money.

In the most disastrous economic policy in American history, the Trump administration, Congress, and the Federal Reserve injected trillions in fiscal stimulus, artificially lowered interest rates to near zero, and grew the balance sheet of the Federal Reserve by $4.7 trillion in 2020. That would have caused insurmountable inflation even if it was used to invest in World War II-level infrastructure, but it was literally flushed down the toilet to fund a shutdown. This created the worst supply chain crisis throughout every sector of the economy – a crisis we are still feeling to this very day. In turn, we experienced a dynamic of too much money chasing too…