Once Again, They’re Missing the Point

How many more times in the next few days am I going to hear one of the following statements:

“We’re in this crisis because of investment banks and Wall Street greed.”

“it’s because of homeowners buying too much home that they knew they couldn’t afford.”

“it’s because of mortgage companies and lax lending standards.”

These are all after-effects of the real cause of the financial “crisis” we’re in now.  I put “crisis” in quotes because no one really knows how much of a crisis it really is.  We keep hearing about “grave consequences” and that we need to “act now,” but why?  This can’t wait til tomorrow?  I didn’t see this urgency to strap regulations on financial institutions during the boom.

Now lawmakers are bickering over golden parachutes.  Once again, it is petty issues and band aids and not tackling the real problem.

What is the real problem?

The Federal Reserve.  A organization run by unelected officials that was created by pressure from the major investment banks.  

The Federal Reserve can not keep playing God with our economy.  How do they know what interest rate banks should charge each other?  They should let the market work and determine those rates.  If times are risky, the rate should rise.  If little risk is seen, the rates will be lower.  Why should the Fed set the rate to what they see fit?  Greenspan cutting the interest rates to 1% is what started all this.  He created an era of cheap and easy money that spiraled out of control.  These are unaccountable unelected officials making these decisions.  Congress needs to take some of the power back from the Fed until we regain some confidence in their economic abilities.

Also, the Federal Reserve needs to stop printing money.  Congress needs to take back control of the money supply.  If you keep printing billions of dollars out of thin air, of course you’re going to have a crisis sooner or later.  Prices will inflate and the rest of the world will lose faith in the dollar and dollar backed securities.  Part of the big run up in oil is because of the weak dollar.

The Fed also needs to have more transparency.  They can not be audited and recently, they have stopped reporting how much money is in the money supply.  This way they can print billions of dollars for their Wall Street friends and not have to show the impact it is having on the supply of money.

Once we know how much money is out there, we can cap how much can be created every year.  This would restore faith in the dollar worldwide.  The dollar would rise instantly because they would know the Fed could not print billions more and make the currency worth less.

This is a very simple solution that is not that complicated.  It almost makes too much sense.  Once this system is fixed, then we can worry about restoring the financial markets.  If we just keep patching the holes and cracks in the dam, eventually, it’s going to give.

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