Wednesday, November 3, 2010

Federal Reserve Bankrupting America

Does history repeat itself? Are we in the verge of repeating the Weimar Republics mistake? I think the answer to both questions is yes. On the day after the elections when everybody is still discussing the results, the Federal Reserve is holding the QE2 meeting. In this meeting they will discuss a second stimulus to put more money into the system. From early speculation the Fed could be putting out between 500 Billion to 1.2 Trillion dollars into our economy. There are two problems with this meeting and the outcome. The first is that congress has no say in this, yay Republicans, and secondly, that this will devalue our currency even more.


The Weimar Republic is post WWI Germany. They had a revolution that was started by 3 sailors who pretty much started a coupe. Under the Weimar Republic the political atmosphere was a lot like we have here in the U.S., a lot of left and right wing people trying to get along. The Weimar Republic used a currency called the “Papiermark”. The Papiermark quickly devalued by going from 4.2 per U.S dollar to over 1 trillion per U.S dollar. The reason this currency was devalued so much was because they couldn’t stop printing money to pay their debts. The German public was completely unaware of all the money being printed. Later on they would start using the “Rentenmark” which was backed by the value of land. Eventually Germany became a member of the League of Nations with veto power. Over a period of just a couple of years the Rentenmark had the same issues as the Papiermark and started devaluing again. This is eventually what led to WWII Germany.

The general public, and I would even venture to say 99% of everyone in this country, does not know that the U.S. credit rating was lowered from an AAA to an AA rating along with other nations on July 13th of this year, some of whom are having riots in the streets as we speak. With the growing national debt reaching an even higher percentage of our GDP, some say 89%; we become an even higher risk to default. No one would loan you money to buy a house with that type of debt to income and neither would another country.

With our current policy over the last 30 years we’ve been taxing and spending our country away into debt oblivion. Now that the rest of the world is refusing to or at least staying away from buying U.S. debt, we now have to look at the Federal Reserve to bail us out and stimulate the economy. Not many people know that the Federal Reserve is not a U.S. government entity and also that it loans us our own currency at an interest rate.

In order to stimulate the economy the Federal Reserve will be printing money and buying its own bonds in order to keep interest rates low and because the U.S. has almost reached its “Debt Ceiling”, this won’t be voted on again until January.

This is where we are starting to repeat the Weimar history. Since the debt ceiling has almost been reached, the U.S. credit rating has been downgraded, foreign countries will not favor loaning the U.S. money, and we’re almost at 100% of our GDP with our debt, we have to start printing our own money to be able to pay our bills. This will devalue our currency even more. This means that a company like General Mills will be required to pay more for the grain they use to make cereal and the price will then be passed onto the consumer, but wait, are our wages going up? No, our wages will not be going up, our people will have a harder time just providing the basics and this could get out of control very quickly. We could very easily go into hyperinflation which is when the value of the dollar declines so quickly that it becomes harder for the markets to respond and prices skyrocket daily or even possibly hourly, and this ultimately leads to the collapse of a currency. The Weimar Republic only lasted from 1918-1933 and had two currency collapses.

In my final thoughts I ask, what is it that we can do to stop this? Considering George Soros gave the U.S. an ultimatum (http://www.youtube.com/watch?v=TOjckJWqb0A) that we either have a managed decline of the dollar or that the world will do it for us, George Soros is responsible for collapsing the “British Sterling”, and George Soros is also a friend and mentor to President Obama, I think that we have to take action quick. We should all write our Congressman and woman, our Senators, and the President and call for an impeachment and congressional hearings. What is happening here, if it’s not Treason, its borderline Treason. The President of the United States is purposefully trying to collapse our economy, do harm to its citizens, and possibly enslave us. We need to actually take some responsibility and start cutting our government so that we can have a balanced budget. Unfortunately we’ll probably have riots in the streets by the Unions like is happening in the UK and France because they have had to cut back spending in order to repair their credit rating as well. This is not an easy solution nor is it something that I think will actually be done, even under our new Republican leadership. So our choice is to become like the Weimar Republic or to stand up, tighten our belt, and realize that it will be hard at first, but like everything worthwhile we’ll enjoy the rewards.

Sources:
 
http://www.wnd.com/?pageId=188885

http://www.reuters.com/article/idUSTRE6A12IA20101103?feedType=RSS&feedName=topNews
http://economix.blogs.nytimes.com/2010/03/15/what-happens-if-americas-credit-rating-is-downgraded/
http://www.wealthdaily.com/articles/us-credit-rating-downgraded/2594
http://news.yahoo.com/s/nm/20101028/ts_nm/us_usa_fed
http://en.wikipedia.org/wiki/Weimar_Republic

5 comments:

Anonymous said...
Wednesday, 03 November, 2010

Thankyou!!!!! i loved ur article!!!!!! and i love the fact u put ur sources there, so i can check them out!!!!!!!!!

Anonymous said...
Wednesday, 03 November, 2010

Nice job dude. When it's not just a bunch of financial garble I'll read it.-FTD'M

Rick said...
Thursday, 04 November, 2010

This is a known fact for some time. It is just a matter of time before it is over and we none the wiser. The powers that be have told us in a number of ways that we choose to ignore for he was popular or he had has kids or what ever the reason was. Our fathers and our current government have been leading us down this path for some time. It started with the great society and has continued till today. When will ever learn that we are the ones in power it is those who control the banks and all the money.

AlteredStates said...
Monday, 15 November, 2010

The way you talk, you make it sound like Obama is the problem and that he was sent here to destroy the world. He is not. He is just another politician who wants to make a name for himself and a lot of money - afterwards. Ambition is the word.

All sorts of name calling has been directed toward him - some justified and some not so justified. But, you have to admit that he was handed a real mess that was left by Alfred E. Newman, I mean, Bush II.

Actually, I think he is beginning to realize that the "cum by yah" theory of governing only works at the "community organizer" level, not the national level. I saw his face yesterday as he was coming out of a meeting with other world leaders. He didn't look very happy. In fact, he looked haggard and worn out. Angry! Well, welcome to the real world Mr. President. You ain't in Kansas anymore. And, you can trade in those Ruby slippers too. You won't be needing them with the work you have to do. Gee, Mr. President, isn't life grand?

But, to be fair, McCain and the "Lady From The Car Show" would have done a terrible job in managing the nightmare Obama was handed. For all his faults, he can do only so much given other circumstances like, the ever faithful opposition called the Republican Party and now, the Tea Party - neither of which has a better solution to the many and varied problems facing the U.S. If they are so competent, why did they let, and in some instances, actually CAUSE the majority of our problems.

Hindsight is always 20/20. So what is all the shouting and criticism all about? We will see what the Republicans do now that they have regained control of the House. Let me go out on a "limb" by saying; "America is not going to like their solutions". They didn't have solutions then, and they still don't have any. Our problems are insolvable. All they want is Power. And, Power is the greatest aphrodisiac.

Hegrins said...
Wednesday, 17 November, 2010

Oh wow, QE2 looks like it's failing, when will we get QE3? http://www.washingtonpost.com/wp-dyn/content/video/2010/11/03/VI2010110308366.html?sid=ST2010111703492

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