Recent Financial Collapse 240 Years In The Making
Recent Financial Collapse 240 Years In The Making
Following the recent financial collapse, everyone had an opinion of who was to blame. Many said that greedy Wall Street firms that invented things such as credit default swaps and mortgage backed securities caused markets to eventually break down. Other people blamed the lenders and brokers who sold the products and steered consumers into mortgages that they could not afford. Still others blamed politicians for decades of liberal policies towards homeownership and overall deregulation of the financial industry. Perhaps, every American in some way was to blame for a huge "boom" and "bust" cycle which had not been seen since The Great Depression. I would argue, however, that the road to financial ruin is one that was started well before any of us were even born. The real root cause of our banking problems can be traced all the way back to the birth of our nation, almost 240 years ago. It was a problem that the Founding Fathers warned us about and tried to prevent. Unfortunately for us, The Founders were not successful. The Founders were just coming out of a devastating depression when the constitution was adopted and several hurtful policies were enacted that are still in effect to this day. The biggest error was that the issuing of money was turned over to a private group of bankers who set up an institution called the Bank of the United States. This decision was strongly discouraged by The Founders who believed that the people's money should only be controlled by the legislature and the people's direct representatives. The Bank of the United States no longer exists but a very similar arrangement continues today under the Federal Reserve System. I think it is safe to say that, over the past 240 years, private bankers have intentionally and unintentionally destroyed our currency due to fractional banking. The Bank of the United States, for example, was allowed to issue three or four times more paper notes or loans than it had in assets. Of course, today, this continues to the extreme as we have seen some investment banks recently leverage their assets by 10 or even 20 times their assets causing enormous amounts of liquidity problems when the markets began to move downward. The Founding Fathers knew that if the money was turned over to private bankers that fractional banking could have disastrous effects. The banks would be able to inflate the economy by loaning out fictitious paper money with no assets behind it. This would "boom" the economy. Then, when borrowers overleveraged themselves so much that an enormous bubble was created, a "bust" or recession would hit. And of course, that is exactly what happened during The Great Depression and again during the recent real estate bubble and financial collapse. Instead of an economy of wealth, as The Founders intended, our nation has become an economy of debt. Unfortunately, it does not appear that sound monetary reform is on the political agenda. But, our country desperately needs a change or we will continue to see dangerous bubbles and recessions in the future. The only real reform would be to take power away from private bankers in the Federal Reserve System and give Congress the responsibility to issue its own money. Also, private banks should be required to lend on existing assets rather than issue loans based on merely a fraction of their assets. The result would be the end of the "boom and bust" cycle and a truer representation of our Founding Fathers' vision. Critics would argue that our economy would grow a lot more slowly causing high unemployment and our ability to regulate monetary policy would be hindered by a slow moving legislature. But, the truth is that even though our economy would grow more conservatively, it would also not be built on a house of cards borrowed from fictitious paper money. Instead, our economy would have a strong foundation of actual, real wealth. Regarding the slow moving nature of the legislature, does anyone really believe the Federal Reserve has done a good job preventing recessions? Did the Fed Chairman do anything at all to prevent the real estate bubble or did he instead support monetary policies that encouraged inflated property prices? And the most important question - Do we the people have the courage to enact the necessary changes that would restore control of the monetary system to the people? Not a chance.
Harmful Money Decisions Gaming Behavior can lead to financial disaster Making Money 24 Hours a Day With Foreign exchange Trading? Save Money with Offshore Application Development Six Figure Renegade Reviews? Our Review Shows Bad News! Free NCLEX Review Secrets The Experts Don't Want You To Know About! Important Finacial Budgeting Fit Over 40 Review - You Don't Have To Be Over the Hill Warren Buffett Keeps Tabs on Pulse Oximeter Free Microsoft Points - Save Your Money Make the best use of Kelty Speedster Swivel Deluxe Stroller Vinyl Tarps – Getting the Most Value for Your Money Hotels of Miami, Florida Reviewed