The twist here is how the Feds are trying to twist our
economy into a terrible mess. As George Santayana said "Those who
cannot learn from history are doomed to repeat it." And our government
cannot or will not remember history. If
you do not know today our Federal Reserve decided to stimulate the economy by
printing "as much money as needed to revive the crippled banking
system" (Edmond L. Andrews)
As of today the "government has assumed at least $7
trillion in direct and indirect financial obligations in the form of Wall
Street bailouts, emergency lending and government guarantees on bank deposits,
inter-bank loans and home mortgages." (Andrews ) and they the "Fed and the Treasury have stepped
into finance consumer debt, from car loans and student loans to small business
loans. The $200 billion program comes close to being a government bank" (
Andrews) because they believe that they
the government needs to step in to save us.
The long-term risks are enormous and difficult to estimate.
They begin with the danger of a new surge of inflation, at least after the
economy comes out of its downturn. But they also include the hazards to
taxpayers of taking responsibility for trillions of dollars in assets that may end
up plunging in value. And they also raise unanswered questions about how the
government will untangle itself from its new obligations, if it can indeed do
so. (Andrews)
If the government would look to history to see that printing
"as much money as they deem necessary to revive the banking system is
seriously flawed and has only resulted in hyperinflation. Hyperinflation
occurs when a country experiences very high and usually accelerating
inflation. Hyperinflation results from a
rapid and continuing increase in the supply of money, which occurs when a government
prints money or creates credits in bank accounts this creates a vicious cycle. Right now the Feds feel that they must print
more money because banks are not loaning money and they feel that this money
will stimulate the economy, however, history will prove that this is definitely
not the case. It will only result in a
devaluing of the dollar and create more problems than it solves.
Both the Theories of Monetarism and Classical Economics
maintain that Hyperinflation is born out of the irresponsibility of the financial
authorities to borrow excess money and make payments of all its expenditures.
Does this sound like our government today.
Their philosophy is that they can just borrow the money that they need
to pay for all the money that they are printing. At some point we the American people are
going to have to pay the piper.
Hyperinflation effectively wipes out the purchasing power of
private and public savings, distorts the economy in favor of the hoarding of
real assets, causes the monetary base, whether specie or hard currency, to flee
the country, and makes the afflicted area anathema to investment. This also
sounds like America today.
We can look to the past to see how printing excessive
amounts of money has had a deleterious effect on economies such as the; Weimar
Republic, Brazil, China and Argentina, even America in the past has succumb to
the lure of printing exorbitant amounts of money as a means of easing financial
woes with disastrous results.
America needs to wake up and learn from the past. We cannot continue to spend ourselves into
oblivion and then print money as if money grows on trees. We need to become fiscally sound and our
current administration does not seem to understand this concept.
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