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Abraham Lincoln Quote

The candid citizen must confess that if the policy of the government, upon vital questions, affecting the whole people, is to be irrevocably fixed by decisions of the Supreme Court, the instant they are made, in ordinary litigation between parties, in person actions, the people will have ceased to be their own rulers, having, to that extent, practically resigned their government into the hands of the eminent tribunal.

ideas > The Federal Reserve + The Federal Government = Our Economic Problems

The Federal Reserve + The Federal Government = Our Economic Problems
I have been following from afar the economic news in the United States. Currently I am living in Santiago Chile. I am so glad that I am not in the United States right now because the economic news is terrible and the politics is not much better. Both candidates donít get it. The problem with our economic system is the government. The Federal Reserve System is a monopoly that controls the supply of money and it generally gives the government and the financial institutions better access to money.

If the government needs more money, but does not want to directly tax the people, it has the Federal Reserve create money out of thin air. The government, in turn, issues treasury notes out of thin air and the Federal Reserve and the government essentially swaps one piece of paper for the other. They use banks as their intermediaries some times. The Federal Reserve and the banks get an interest payment for these transactions. What does the government get? It gets more money to pump into the system. This creation of money out of thin air dilutes the value of all other money. The government gets what it wants, more money to do what it wants now. Those who get hurt are those who are not the direct beneficiaries of this new money. That would be you and I folks. The monetary system right now is set up to benefit two entities. It benefits the government because they donít have to go directly to the American people for more money. Instead, they just have it printed and introduce it into the economy. This creates inflation and havenít we all seen a little bit of that lately. Second, it benefits the financial institutions because they get a cut of the pie.

It should come as no surprise to everyone that many of these banks acted so recklessly. What did they have to lose? The Feds were providing tons of money for them to lend and so they lent it. They didnít care who got it or where it went because they got a cut of the pie through fees and whatever. So what if they failed? The Feds would just bail them out. They had bailed them out in the past. The problem with having the Federal Reserve and the Federal government be the sole supplier of currency is that it is impossible for us, the consumers, to keep them honest. They are a monopoly. They donít have to listen to us. If there were multiple suppliers of money, you and I would be able to keep them honest because if any form of money was being printed with abandon, we would just abandon it.

The Federal government, with all these bailouts, is essentially trying to cover up its sins in the past. Congress and most of those who have been in Congress for a long time are guilty of these sins as well. They have been recklessly spending and printing money with reckless abandon. It has caused our economy to switch from producing goods and services that we as consumers want to serve the government. In the end, it will all fall apart as the economy becomes more and more controlled by the federal government. I look at all these supposed experts in economics from Ben Bernanke to Treasury Secretary Paulson and I just laugh. These guys are not really smart. They might think they are smart, but ultimately they are the heads of the biggest con game in town. Just think about it. They are attempting to centrally control the economy and where has that gotten countries in the past? It has gotten them nowhere. More control means more money going places that the government dictates and that isnít necessarily to things that you or I want. Why do you think manufacturing has left the US? Itís really quite simple. The federal government has been growing more and more and wasting more and more money. This has caused a huge amount of malinvestment in our country to things that donít matter. Think about all the worthless, paper shuffling jobs that exist in our country now because of the federal government. That is not productive work. That is work that exists solely to satisfy some bureaucratic rule that really has no positive impact on our lives. Where do you think these salaries had to come from? They came from the manufacturing sector. This isnít rocket science folks. It didnít have to be this way, but unfortunately the people have lost the power to do anything differently. Congress no longer listens to the people. Congress continues to prop up a system that they created. It should come as no surprise that those who have supported the system for so long are incapable of admitting their sins. It would be difficult to do so. It would require admitting that one has been deceitful and wrong for many years. Most of us cannot do that. It is too hard on the conscience.

That is my rambling for the week. Just remember that the federal reserve and central bank are not your friends. They exist for one purpose and one purpose only. That is to serve their masters, the federal government. They serve them by providing them money when they need it. This printing of money out of nowhere is why we are in the mess that we are in. The only solution to this problem is not a bailout. That will only lead to the government controlling more and more of the economy. That is called central planning and it doesnít work. History tells us that. The only solution is to abolish the federal reserve and permanently strip the federal governmentís ability to tax by abolishing the 16th amendment. Any other course of action will only lead to further debt, inflation, and economic misery. That is the natural course of the road we are taking. No amount of talking or wishing will make it any different. The government can lie all they want with their mounds of data and definition, but the truth is that they have been horribly mismanaging the economy through central planning (socialism) and central banking (The Federal Reserve) for several decades now. It ainít rocket science folks. More government is bad news. Less government is the solution. If you havenít called your Congressional Rep and expressed your outrage yet, then you need to do so. You need to make it a point to do this on a regular basis. The government exists because the people created it. The people donít exist to serve the government. If they arenít doing what you and I want them to do, then we need to do something about it.
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