Money Grows On Trees

Well, technically money is made from paper, so...I suppose there is an indirect truth to that title. However, the government would have you believe that it literally grows on trees, and all we have to do is 'harvest' (print) more.

Again, technically, they're right. They can print until the cows come home and it will increase the available money supply. They've done it before, and will likely do it again; probably more this year.

To clarify, they have not yet created this money. Last Wednesday, however, they announced their intent to do so. This, predictably, created a huge spike in gold prices. Gold, as I'm sure you're aware, is typically used as a hedge against inflation, which is exactly what will occur as the Fed pumps out more money.

Let me summarize what they're talking about doing, and then I want you to ask yourself if you think it's right.

Generally, the government raises money primarily through taxes, but more funds are needed, it raises funds by selling U.S. Treasury bonds. The problem is that the rest of the world is very hesitant in purchasing more of our bonds because they lack faith in our Dollar. So if the government can't find buyers for the Treasuries, guess who it sells them to?

ITSELF.

Yep, essentially, the Federal Reserve purchases the Treasuries, then prints money in order to pay for them. They literally create money out of thin air. The government gets the money it 'needed', and the Fed gets a big I.O.U from the government in the form of the Treasuries.

This is insane!

Obama is so determined to pass his agenda (the ginormous budget) that he's essentially forcing the Fed to print the money to pay for it. Do you understand that? There is NOT enough money to pay for this budget, so the solution is to create money and get something for nothing. There is no such thing as a free lunch, and that applies to our government as well.

It would be one thing if I just disagreed with how the money is to be spent (which I do), and we actually HAD the money. Then the argument could be about more substance and debating liberal vs. conservative agendas. However they're forcing the issue even when funds are non-existent, so it doesn't even matter what philosophy you follow.

It's like this: imagine if you really want to buy something that you think will, in the end, turn a profit AND perform a charitable service to the community. Cool deal, huh? Now let's pretend that you're flat broke. No; not just broke, but "on-the-verge-of-bankruptcy" broke. The only way to purchase this thing is to rack up every credit card you have and then go get more and rack them up too. Would any sane person advise you to do this? Would any bank lend you the money based on your belief? NO, but that's exactly what Obama is doing; only their credit limit is essentially unlimited since they (unlike you) have a really nifty printing press down in the basement somewhere...

More can be said about this issue, and I was going to elaborate, but I found this article yesterday that says it for me. No need in repeating it here. Please read it and think about it. We're heading down a road that's never been traveled, and, like the old Frost poem, it's probably going to make all the difference.