Money does grow on trees!

byiamahoosier

701 followers

11 years ago

You know how when you were young and you asked your parents for something they couldn’t afford to give you and they said “money doesn’t grow on trees”?
Well it turns out; it does, if you’re the United States Government that is.
First a little history lesson: right after WWII the Dollar became what is known as the Reserve Currency. This is a very important designation and one most Americans have no idea about. This one factor is what allows the U.S. to continue to dig the hole deeper. Our current deficiency of $16.9T and counting is only sustainable for this one reason. What does Reserve Currency mean? The Dollar is the currency by which all other currencies are measured, where they get their value if you will. This is known as the exchange rate. What is another currency worth in Dollars?
It’s important to note, that this designation is awarded due to the confidence in the Dollar. Fiscal policies, political stability, economic power, and many other obtuse factors determine which currency shall have this status.
Until October 1971 the value of the Dollar was more absolute, measurable if you will. The value of the Dollar was supported by gold reserves held by the U.S. Treasury. However for reasons I won’t detail, the Dollar was decoupled from the gold reserves and it became what is known as fiat currency. The Nixon Shock cancelled the direct convertibility of the U.S. Dollar into gold.
Fiat money is government issued currency that is neither convertible by law into any other thing, nor fixed in values in terms of any objective standard. In other words, confidence determines the value. This is both good and bad news for the U.S. as you can well imagine.
The good news is, no other currency in the world has a greater desirability or confidence than the Dollar. The bad news is this confidence could disappear at any time. Clearly confidence has eroded over the last several years with the market collapse of 2007, the lowering of the AAA debt rating in 2012 and the current Government shutdown and impending debt limit deadline debate. All of these things focus on the inability of the U.S. to manage its own affairs, and draws into question the logic of tying the future of the World’s economy to that of a Country that can’t control its own fiscal challenges.
None the less, the convergence of these factors has led to the ability of the U.S. Federal Reserve system to print money with impunity. The U.S. Treasury has been buying its own debt at an unprecedented rate for the last several years. This is essentially an artificial stimulus for the U.S. economy. Somehow it has been determined that we can borrow money from ourselves. Essentially, money growing on trees!
This money wasn’t created by any normal economic activity or earned by any means of productive labor. It was simply pumped into the system as fast as it could be printed. In many cases, truth be known, it isn’t even printed but simply an accounting move at the highest level. If all this money had made its way into the general economy, mine and you’re pocket; we would inflation that would blow your mind. The fact that we don’t, indicates that most of this activity is at the highest level, among the banks and financial institutions that run our economy.
Not that the government doesn’t try. They spend money like they have piles of it lying around they don’t know what to do with. I’ll give you a couple of glaring examples:
9/11 victims- the average payout to families of 9/11 victims was $3.5 million, 70% from the government (tax payers). No greater tragedy in our history, but who determined and why are tax payers reimbursing these victims? First responders who died on average received $1.8 million…..I know, why less than victims? Overall the U.S. taxpayer paid over $5 billion to 9/11 victims….money we don’t have I will remind you.
The website for the Affordable Healthcare program (Obamacare). Current estimates are over $500 million for this shining example of government mismanagement. To top it off, a Canadian company- CGI, got the contract to develop this clunker. Not only was the amount spent ridiculous, but the fact that a U.S. company couldn’t be found in the middle of one of the worst recessions in our history to produce it, is an outrage.
Recent investigations into Social Security and VA disability, Medicare and Medicaid fraud, the U.S. Postal Service virtually bankrupt, all shining examples of our government’s inability to manage anything effectively and efficiently.
Money may grow on trees in the U.S., but given the inability of those who run our country to manage this incredible benefit, it may turn out to be the worst thing that ever happened to us. Perhaps the lesson should be, money shouldn’t grow on trees!

Posted in: Politics and the Economy , Tagged: 9/11, Affordable Healthcare, banks, billion, currency, defecit, economy, exchange rate, gold, Healthcare, Medicaid fraud, Medicare, million, money, Obamacare, recession, Reserve Currency, the Dollar, U.S. economy, U.S. Postal Service, U.S. Treasury, United States Government

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