Last week I visited one of my banks in South Carolina and they informed me that my interest rate had been lowered to .05%. This is stark contrast to my bank accounts in Brazil where the interest rate has been raised to 10%. To be clear, interest rates in Brazil are 200 times that of the United States. This is not some bizarre Hollywood movie, this is our sad reality in the country that we love. Here are the top 17 reasons why cheap money is ruining the United States and large parts of the world.
1. WE ARE LIVING A LIE
You cannot base an economy on cheap money for a sustainable period of time. Furthermore, once a country / central bank goes down the cheap money road, and it is like a drug, and there is no simple way to reverse course without severe withdrawal symptoms.
2. INFLATION IS EVERYWHERE
By pumping too much money into the economy, it creates inflation where ever you look. It is most pronounced in food prices and other domestic items. The government intentionally excludes food, energy and health care costs from their monthly inflation calculation to further the lie that inflation is moderate.
3. WORK IS IMPORTANT
A good economy is based on the work of its citizens that provide value to itself and that can be exported to the rest of the world. But now, our government wants us to believe that we don’t have to work. Just sit in your house, sign a mortgage and the price will rise, and you don’t have to work to make money. We are in the process of raising a whole generation of young people who don’t understand the value of work.
4. SAVING MONEY IS A VIRTUE
It is a virtue to save money. It teaches us discipline and forces us to prioritize and make choices that make us all better people. But this value has been lost in America. No longer is it important to save money, if we can go into debt. In today’s world, we encourage debt and consumption at the expense of savings.
5. RUINING THE FUTURE
By definition, setting interest rates at 0%, puts no value on the future. We are discounting the future of our children and grand children so that we can party like there is no tomorrow. We live under the false notion that if our future is more pleasant that somehow that translates to a brighter future for our young people. NOT.
6. BIG GOVERNMENT SPIRAL
Cheap money enables our humongous federal government that can mercilessly attack foreign countries without provocation, and create sophisticated spying technologies and progams, all while lower taxes to the richest Americans. The ugly part is that the less the bone headed 0% interest rate plans work, the larger the government becomes in safety nets and bizarre jobs programs like the Orwellian body scanners at your local airport.
7. BANKS OWN THE COUNTRY
When you sign a mortgage document, the bank almost like magic gives you money to buy a house. Behind the scenes, the bank takes title to your house. This is happening in business too. So the American dream is a clever ruse for the banks to own virtually all of the residential and commercial property in the country.
8. HURTING SMALL BUSINESS
The stories are legendary of American entrepreneurs that became incredible successes building a business in a garage. This is no longer true. To start a business today,, the entrepreneur goes to a VC firm, bank or hedge fund, and does a Power Point presentation. They either get their seed money or not. If you are unsuccessful in getting seed money, and you persevere, be aware that your primary competition will be companies that have a healthy dose of cheap money.
When I was a boy, small business was genuinely the engine of the economy. The hardware store, the record store, restaurants and on and on were all small businesses, and now all these segments are owned by Wall Street on a national level.
9. WE HAVE BECOME RISK AVERSE
To be clear, the banks by that I mean the entire financial system is risk averse. It was once the responsibility of the financial sector to analyze and value risk. They no longer do that.
10. THE SYSTEM IS CORRUPT
When you have so much cheap money flying around, it is almost begging for open corruption. We need look no further than the ratings agency fiasco to understand how deep the corruption lies. And the federal government decides to regulate LESS. This means that the entire system is corrupt to its very core.
12. CAPITALISM IS LOST
The problem in the United States is that we no longer have capitalism. We only need to look at health insurance, energy, banking, pharmaceuticals and on and on. The winners and losers in the market place are predetermined by the companies that funnel cheap money into lobbyists in Washington DC.
13. BANKING ELITE
One by product of the cheap money and zero regulation is that we have created a new societal rung of wealth represented primarily by our financial sector. America has a rich history of creating wealth through innovation and the rewards fell to those companies that profoundly improved the productivity of the world. Think Henry Ford, Thomas Edison, Alexander Graham Bell and more recently Bill Gates, Andy Grove, Michael Dell and so on. The problem with the new banking elite is that they extract their riches from society rather than improving it.
14. PANIC MENTALITY
There is a panic mentality in the world today. We have been programmed to religiously watch the news, as if the next tidbit will be the straw that breaks the camel’s back and throws the economy and potentially the world into a tail spin. There are two flaws. America is still strong but our banks are weak. Second, people normally make poor decisions in a panic. A good example is the monstrous bail out in 2008.
15. ITS OUR MONEY
What is the dollar represent? Or any currency for that matter. The dollar represents the future productivity of all the people and companies that transact in it. In China, the RMB translates to the People’s Money. Imagine that. A Communist nation recognizing the fact that the currency is a reflection of the productivity of its people.
When Greenspan, Bernnake, and now Yellen, print enormous amount of money to “stimulate the economy”, they are not taking the money from us. They are moving the money from the future where it would have been used for future productivity. The problem is that many of the citizens of these future generations have not been born yet. Who if not us the citizens are responsible for preventing this type of theft? Each time they print more money, they make the future a little less bright.
16. DIVIDED CITIZENRY
The financial sector is pleased with the present state of affairs. The last thing they want is change. And we have a grid locked Congress, and an inept president. The media focuses on any other issue other than this one. We focus on abortion, gay marriage, et al, instead of the one issue that will impact us and the future of the country itself. The media owned by Wall Street and the federal government does everything in its power to focus the public on any issue other than this. Think about it. In the last two presidential elections, how much time was spent debating or discussing how cheap money is ruining the country?
The people must UNITE for America to work.
17. THE THIRD WORLD WAR AND THE UNITED STATES OF MONEY
The truly scary part is that the people are not united but the banks are. The banks control the American Congress, but the American Central Bank called the Fed, is colluding with other banks throughout the world. Worse yet, there are three banks called the IMF, the World Bank, and the BIS that attempt to control other countries and other banks.
I am speculating here, but the power and money grab is not a problem isolated to the United States. It is happening on a world wide basis, and we the citizens of the world will have to find a solution or there will be an out right war of the magnitude we have not seen in the history of humanity.