Money of the Federal Reserve and the Effects on the Economy

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Money of the Federal Reserve and the Effects on the Economy


The United States economy is in a poor state.  This much can be agreed upon by everyone.  It has been since 2008 officially, but before the public realized it, it was already getting bad.  Our economy is run by people spending.  If people don’t spend our economy suffers.  So is it the lack of spending that is keeping the economy down?  I don’t think so.

Remember the big backlash on Freddy Mac?  Well, they aren’t fully to blame.  Our treasury ,through the mint and Fed, generates money, without any legitimate currency backing it.  Then that money is then given to Freddy Mac as loan and to purchase shares.  Then Freddy Mac will loan that money to banks, then the banks loan it to us.

Think about this.  We have no substantial backing.  We are borrowing money that doesn’t exist.  The money isn’t real, but the debt we are held accountable for is.

As money is generated, it is worth less.  When it is worth less, the middle class, that is the heaviest taxed group, earns less when they get their paycheck.  But not only is the paycheck worth less, but they get taxed at a higher rate, because we have to help those that end up losing jobs, and those who ended up joining the poverty level due to the inflation.

But stocks are up.  How is that?  When businesses are allowed to borrow, they can produce, expand, sell, and buy.  Remember, public opinion is what drives the market, so as long as the businesses LOOK like they are doing well, they will have a high stock value.  If you are invested for a stock’s value, you are invested very incorrectly, because the values can plummet into nothing.  Once the business assets are diminished and stock values are low, they lack the ability to borrow.

So, our earnings are down, our taxes are up, our businesses are worth less than they know.  Our government cannot stop their spending, and we cannot pay enough taxes.  How do we give the government enough money to cover the ridiculous expenses?  They borrow, and have the Fed create more cash.

So, no matter what we do, we make less and pay more, the government spends more and more, so they borrow more and more.  So we get into further debt.  Hyper inflation is really a possibility.  Do I think it will be a post apocalyptic time?  Not really, but it will be hard for everyone and there will be a lot more theft as people are pressed to provide for their families.

The more we do to prepare for this, by raising our self sufficiency, the better off we will be.

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Ken is addicted to fitness and mountain biking. He is such a thrill seeker, people are starting to be concerned!He enjoys MTBing, Hiking, Climbing, Geocaching, Orienteering, Weight Lifting, and Wilderness Survival.

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