Invest say $50,000 in a US Bank Savings Plan and if they give you 3%-4% a year that's $1,500-$2,000 a year. You can either take that money out or leave it in and let it gain value. But the most beautiful thing is that since it's American it has to legally have FDIC backing which means any and all amounts up $100,000 are insured. If you live in the US look for that little FDIC sticker on the front door of your bank or somewhere around next time you visit it.
Yep, same thing with US treasury bonds. As long as the government doesn't default you are guaranteed your money. I think the 30 year bond rate is about 5.3% right now. Ut'll probably go up quite a bit in the coming 2 years.
That is some major optimism you have going there. "Thank God" that an agency funded via misappropriation is there to help you pretend your money is safe.
In 1985, the FDIC started paying out more than it took in, just like all other state Ponzi schemes eventually do. How do you suppose this shortfall was covered? Through inflation, taxes and borrowing.
How was the $ 150 billion-ish shortfall of the S&L collapse covered? Through inflation, taxes and borrowing.
How will any future shortfalls be covered? Can you guess?
But thank God, the government guarantees that I won't lose any money if it's in an FDIC-insured bank, even if they have to beg, borrow or steal it for me.
But since they're the government they are the money so that means they can make as much as they like. They can create as much as they desire. It's not that good a thing but it's ok.
Using BLS statistics for inflation, $ 10,000.00 invested in 30-year Treasury bonds would be worth $ 14,800.00 adjusted for inflation at 5.3% (this of course oversimplifies by assuming static inflation and static interest.) So the Treasury is basically running a "LYIP" that pays 1.6% per year "guaranteed."
Under the best case scenario, how is it guaranteed? Through inflation, tax and borrowing. And who will bear the brunt of that burden? Your kids. That's the best-case scenario: you loan the government $ 10,000.00, they use the money to bomb some terrorists in Ethniklashistan or funnel the money to some senator's pet road project or whatever, then your kids get a bill for your money plus 1.6% pa. Best possible outcome.
Worst case scenario: As of 9 December the federal debt stood at $7,546,778,677,941.37 (see here.) That's seven and one-half trillion dollars. The recent debt ceiling increase to $ 8.18 trillion is approximately 70% the size of the entire U.S. economy. What makes you think this debt will still be honoured thirty years from now? I'd be suprised if the U.S. can go half that before defaulting or engaging in a massive restructuring of the debt.
And they don't simply "make money" out of thin air and that's the end of it. Inflation decreases the overall value of money. So again, even if they could just magically create money anytime they felt like it, it is still yourself in old age, and your kids and grandkids, who end up footing the bill -- either overtly though taxation, or covertly through the less-immediate costs of inflation and increased borrowing.
But since the government owns the Federal Reserve and basically the money system they could write a check for as much as they want and it wouldn't bounce.
Even if that was technically correct (it isn't) do you not see that the only way to make that fantasy a reality is to devalue all of the existing money for the sake of making good on the new money?
Visit the U.S. Bureau of Labour Statistics site, here. On the front page there is a link that says "Inflation Calculator." If you look at the value of $1 at the time that the Federal Reserve system was created, in 1913, compared to today in 2004, $ 1.00 then is worth $ 19.28 now. That is what happens when you pretend that you can just create new money any time you feel like it, and that there won't be consequences down the road.
Originally posted by lyrik56@Dec 14 2004, 04:28 AM But since the government owns the Federal Reserve and basically the money system they could write a check for as much as they want and it wouldn't bounce.
I thought that the Federal Reserve was a completely seperate entity to the Government? Maybe I heard wrong. It might have come from one of those Illuminate conspiracy theories.
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