Tags: Fed | debt | government | money

In God We Trust (Just Not the Federal Reserve)

Wednesday, 30 Oct 2013 07:56 AM

By Ashish Advani

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On every legal tender note in the United States, we see the affirmation "In God we Trust." So whether you agree or not, you are forced to believe in God. Given what is happening these days, it is a good thing that we trust in God and not the Federal Reserve or the current government shenanigans.

Mind you this is not an indictment of the current government in the United States. Virtually all governments in most countries are playing tricks on their citizens in order to fuel their spending addiction.

Let's look at what the current situation here is:

The Federal Reserve Bank was created on Dec. 23, 1913, when the Federal Reserve Act was signed into law by Congress. The Act was created in reaction to the Panic of 1907 and demands for a national bank for several decades before that. One of the purposes of the Federal Reserve Bank was to help avoid the boom-and-bust cycles that the economy faced on a regular basis. It was to help smoothen out the economic cycles and grow the prosperity of this nation.

Did it do that? You decide.

In the 100 years prior to the establishment of the Fed, there were 18 distinct recessions or depressions: 1815, 1822, 1825, 1828, 1833, 1836, 1839, 1845, 1847, 1853, 1860, 1865, 1869, 1873, 1887, 1890, 1899 and 1902.

In the 100 years since the Fed was established, we have had 18 recessions or depressions: 1918, 1920, 1923, 1926, 1929, 1937, 1945, 1949, 1953, 1958, 1960, 1973, 1980, 1981, 1990, 2001 and 2008.

So the expert management of the esteemed Fed seems to have had no effect on the boom and bust cycle. All it has done is muddied the waters and made this a bigger bubble that bursts more violently than each previous one did. The entire credit boom of the last 100 years is now at risk.

Instead of really regulating and monitoring the excesses, the Fed has helped fuel them or helped mask them. They have gone from being an body that should be independent of the government in power to becoming the enabler of governments in conducting fiscal irresponsibilities and making the whole foundation unstable.

Instead of enacting real reform, they stand by and watch the current government play around with data to hide the problems. Instead of being true fiscal monitors, they work hand in glove with the establishment so that they can continue their spending habits.

Take the Debt Limit Reform Act (H.R. 3293). Just introduced in Congress, it sounds like finally we have some congressmen acting responsibly and wanting to actually "reform" the public debt limit. Where I come from, reform means changing how you do what you do — for the better.

But not here folks!

They are not reforming anything. This bill just allows the government to stop counting a large portion of its debt as debt. One of the biggest components of debt is what various government departments owe each other.

So Medicare and Social Security hold massive trust funds in Treasurys. This is money owed to retirees. But since one U.S. government agency owes this money to another U.S. government agency, the bill seeks to allow the government not to count these owed funds as debt.

If this bill passes, about 30 percent of our current debt (nearly $5 trillion) will just vanish.

Remember, this money is owed to the citizens, but would not to be counted as debt. This way, when the U.S. government defaults, it will not cause any panic in the financial markets, as this amount is no longer counted. The private citizen will be screwed, but the financial markets will carry on and a currency crisis will be avoided.

I would look to get funds out of the grasps of the Fed and this government as soon as possible so that they can steal less of my hard-earned money. Diversify overseas and reduce (not really eliminate, but certainly reduce) your risk.

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