In the seventies Richard Nixon decided by executive order, to remove the requirement to have gold reserves for every dollar minted. Over the years since his administration, we have slowly increased the printing of money, at rates that out weighed the reasonable amount of what existed as reserves.
Not until President Obama’s administration have we seen such a total disregard for our financial system. The reasoning for my claim works this way. Printing money 24/7 does NOT mean we have more money. Increased spending on government programs while spacing out the time line in which to pay it back does NOT mean we have it to spend.
Although the government talks about the “long term” as if it were virtuous, the long term they are talking about has to due with our debt, not our investment. Politicians think only in short term, aka election cycle. They more they can space out into the future, the less they will have to deal with it, because let’s face it, they won’t be around when it comes time to pay for it.
We have chased production from our country, as we have agricultural, so we don’t make anything here anymore. We have to buy almost everything we use from other countries, and we need cash to do that. Our government thinks that if we make more money we will HAVE more money to spend on the things we don’t make. If you have a specific amount of money which consequentially isn’t enough to buy those items you need, and you print 100% more then you destroy through attrition, it doesn’t mean you have twice as much money, it means the money you have is now worth half as much.
The government would have you believe that his is the only way to bring back the economy, just throw money at the problem, unfortunately it’s money we don’t have. If we did have the money we wouldn’t be having this problem now would we?
No country in the world has tried a program as large or as foolhardy as this in the past. President Obama has promised a recovery in a few years, and yet he has nothing to base his optimism on. There is a real possibility; this whole situation can fail, thereby ruining our country’s financial condition for years to come. A depression the size of the Great Depression is a possibility, but continual printing of money could also trigger a hyperinflation.
The country is concerned, and rightly so, nobody has a definitive answer, because it’s never been tried before. In the mean time politicians point fingers at CEOs, taking the stress and investigation on their very involvement.
Thank God President Obama has time in this “minor inconvenience” to pick winners of the “sweet 16” college basketball, write a children’s book, and appear on Jay Leno…….that’s surely the way to calm a sore Peter.