A Federal Reserve–induced depression!

Our nation is facing a perfect financial storm that will affect the lives of our citizens for decades to come. Not since World War II has an economy such as in the United States had to transition so dramatically.

After World War II, the U. S. moved from a wartime footing to a peacetime, private sector–controlled economy. Europe benefited from the Marshall Plan, which included generous protections in terms of tariffs for Europe and the rest of the world at the expense of U.S. businesses. President Trump is successfully restoring balance, almost 35 years after prior administrations should have restored free trade and tariff equilibrium.

In 2025, the United States is once again in a massive transition from a government sector–controlled economy to a private sector–controlled economy. The U. S. economy with its $37 trillion in debt is strategically vulnerable to economic disaster. The ongoing deficits and high interest rates will only exacerbate the problem. We cannot, as a nation, continue to function as we have since Clinton-Gingrich last balanced the budget.

Unfortunately, unlike at the end of World War II, the Federal Reserve is operating contrary to rational economic policy.

Monetary policy and fiscal policy must be consistently applied, or the economic outcomes will be unpredictable.

The Federal Reserve has been asking the wrong questions since 2008. It is solving the wrong problem.

Instead of trying to control inflation, the Fed should be asking why inflation is so low in light of record amounts of funding provided into the marketplace. Inflation, under normal economic models, should have been out of control, even worse than the 9% high during the early part of the Biden administration.

With $2-trillion annual deficits, a complete COVID shutdown of the economy, supply chain disruptions, and regulatory overreach for business development, inflation should have been higher than 15% annually. The fact that inflation, though horrible, is not even worse should warn all at the Federal Reserve of the dangers of a deflationary spiral.

Quantitative easing for over ten years is still being unwound. The Federal Reserve balance sheet is a disaster.

None of these scenarios fosters an environment for an economic transition to the private sector. If this transition is not made, the U.S. will not survive a sustained economic attack, such as from the BRICS nations or any other forces that may come to pass.

One only needs to look at the impact that OPEC had in the early 1970s, when the U.S. became economically dependent upon OPEC for fueling our economy. The results included long gas lines, record-high interest rates, and unsustainable inflation.

At present, the transition back to the private sector is the only viable solution for the long-term survival of our nation.

Fortunately, we have a president who understands the magnitude of the problem. Fiscal policy is starting to come under control, although we have a long way to go to turn the corner. DOGE is a step in the right direction.

The Federal Reserve, on the other hand, is unraveling the president's plans with an unworkable policy toward interest rates.

Rates must come down immediately so that businesses can access the financial capital necessary to cost effectively manage the transition of our economy.

So far, the Fed has missed virtually every form of interest rate guidance that it has provided. Had a CEO of a publicly traded company missed the mark so often, the SEC would have interceded long ago.

Rather than monetary policy helping our economy, it is entirely possible that rational theories of monetary policy may have negative effects when irrationally applied. Deflationary pressures exist, and the Federal Reserve is leading us right into that deflationary trap.

In my years in the U.S. Marine Corps Reserve as the commanding officer of the Civil Affairs Unit, and with expertise in economic warfare, I never imagined that the Federal Reserve would be operating to the detriment of our economy and our people. Once a deflationary spiral starts, it is virtually impossible to stop.

Deflation has devastating effects in every aspect of life. It destroys lives, opportunities, and hope of our great citizens.

The time to act is now. Alan Greenspan's "Age of Turbulence" will look calm in retrospect should the Federal Reserve not act now to reduce interest rates and facilitate the transition to a peacetime and private sector–controlled economy.

Should the Fed fail to act, it will have caused an economic depression and deflationary spiral unlike anything we have ever seen.

Col. Frank Ryan, CPA, USMCR (ret.) served in Iraq and briefly in Afghanistan and specializes in corporate restructuring and lectures on ethics for the state CPA societies. He has served on numerous boards of publicly traded and non-profit organizations. He can be reached at [email protected] and twitter at @fryan1951.

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