Obama’s Reassurance Rings Hollow

Earlier today (3/15), President Obama tried to reassure the rest of the world that the US was still worth investing in.  Here’s a portion of what he said today:

“There’s a reason why even in the midst of this economic crisis, you’ve seen actual increases in investment flows here into the United States,” Mr. Obama told reporters. “I think it’s a recognition that the stability not only of our economic system but our political system is extraordinary.”

He added, “Not just the Chinese government, but every investor can have absolute confidence in the soundness of investments in the United States.”

While China’s Premier, Wen, had a legitimate reason to be worried about his country’s holdings, the Obama administration just repeated the same line about the US being a good place to invest.

There’s a problem with Obama’s response.  He is talking about investing inside the United States.  China is worried about investing in the United States government.

China supposedly holds almost 4 trillion US dollars and treasury bills in reserve.  Every dollar the Federal Reserve prints and the government spends decreases the value of the Chinese holdings.  They are our main creditor, and without them, we would have to find new creditors or dramatically cut spending.

We need to assure the rest of the world that our money is sound and that we are in control of our spending.  We can not keep printing money forever and expect everyone to just take our word for it.  We need to show the rest of the world that we are concerned about debasing our currency and that the dollar could collapse if we don’t start to control the printing press.

As a nation, we can not keep believing that just because we are the United States that things will always be good.  The end of almost every empire in the history of the world has been because the government went bankrupt.  I really believe that the end of our empire is near if we do not change our ways.

We could easily assure the rest of the world that the dollar is strong by having Congress place rules on the Fed.  Ron Paul has introduced a bill to audit the Fed, which is long overdue.  They need to go a step further and put a limit or cap on how many dollars they can print.  This would instantly bolster the dollar.  If these means are successful, then they could tie the cap to gold, and put us back on a standard of real money.

The key though, is to limit the Federal Reserve and limit the spending by our government.  If we do not, it won’t matter what we say.  The world will know that the dollar is being devalued and they will stop lending us money.  We need to take our creditor’s concerns seriously, and not believe that our country is invincible.

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