I give you fair warning now. This is a rant.
Last time I checked, we live in a capitalistic society. Last time I checked, the stock market is a place to make and loose large amounts of money. Last time I checked, the backbone of a capitalistic market is a medium of the survival of the fittest. Last time I checked, if I bounce a check, the US government is not going to help me. Last time I checked, my dollar is loosing its value.
In the past few months, I have been quiet on the topic of the economy. However, I have seen enough that I need to get some things off of my chest.
Why does the Federal Reserve (Fed) think that it is its place to bail out the stock market because the county has done itself a disservice and set itself up for this failure. Greedy companies decided that giving money away to those that could not afford to do what they wanted under normal means to create this deceptive program (a cleverly concealed gamble) called Adjustable Rate Mortgage (ARM). This system is not bad by itself as for the people that were lucky in their gamble are reaping the benefits it was designed to provide.
However, once the housing market started to boom, these credit companies decided that the more houses they could get people in, the better it would look on the market or some such nonsense. So, now when the rates start to go up instead of down and the people who took this gamble can't make their payments and put the lenders into a position of diminishing returns, it suddenly becomes the Fed's role to fix it? I don't think so.
Please don't get me wrong, I am not demonizing the people that took this risk, I'm holding the lenders culpable for the damage for which they setup themselves. I am sure that the ARM was a ray of sunshine from the heavens that would permit them to fulfill a dream such as homeownership. I feel sorry for them. I don't know if they were duped into an ARM (didn't exactly understand the risk) or if they took a calculated risk and got burned. Either way, like with anything else that depends on the market, it is risky business and I have to think that they were duped more often than not into thinking that a housing bubble didn't exist. Well, we know for certain that it did.
So, back to the Fed. So, due to poor decision making in companies has led to the utter meltdown of the stock market. The stock market is not linear. It is known to ebb and wake and the severity of these movements are, for the most part, unpredictable. Well, this one is becoming predictable. A recession is imminent.
I know that recession is commonly a bad word, however, based on the economic experts, so far within my lifetime, I have experienced two such events. As a country, we've been thru numerous. The stock market is like a human in many ways. The market cannot continue to go up everyday, otherwise, what would be the point. Any one person cannot have a good day everyday. It is a fact of life. Also, since the market is based upon the performance of other companies this good day/bad day dynamic happens everyday. Why can't the market be left alone to fix itself out of the situation that is beginning?
Ok, I feel bad that individuals are going to be personally effected by an imminent recession. Companies are going to go belly-up. People are going to loose their jobs. These people that loose their jobs are going to loose their personal effects, particularly homeowners with mortgages. Recession stirs up a multitude of negative images and I can see why the avoidance of one is such a good intention. However, the road to hell was paved with good intentions.
I'm ok with the Fed cutting interest rates to support the effort to quell the effects of a recession, however, what good is ti doing? The market goes up on the day of the cut and then just gets flushed the following days. It just feels like the rate cuts are just a bandaide for a wound that would need a tourniquet. Furthermore, I have a problem with them taking money to bail out companies that set themselves up for just this situation. Furthermore, back in February the government decided that a way to quell the market was with a stimulus package. Does anyone know where this money comes from? I do. The Fed prints it. The US Dollar is no longer backed by gold. If it were, with gold being in the neighborhood of $1k per ounce, our dollar should be getting stronger. Instead, the dollar is a figment of our imaginations. A dollar is only worth what people are willing to give you for it. This dynamic exasperates in the international market. Therefore, if more dollars are printed and circulated the value of it goes down. Inflation is a byproduct of a fiat monetary system.
Please, take the hour and watch this video. If anything I've said thus far makes any rational sense to you thus far, take the time and get the full story as to what is going on in our economy as far as the devaluation of the dollar.
Fiat empire
If I can't sway you to think that what they are doing is wrong and you won't give the video a portion of your time then please don't cry to me when we're at the base of the totem pole of the international market. I think something needs to be done to revalue the dollar based on a physical precious metal like gold. In doing so, the Federal Reserve will have to be removed.
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