Government Intervention And It’s Consequences.
I found this video on EconomicPolicyJournal.com, it is by Nick Gogerty at gogerty.com. You will visually see the inflating of the housing bubble caused by Federal Reserve money printing. You will also see the bursting of the housing bubble, a bubble which would have never been created in the first place, if not for the Fed’s money pumping.
A toxic brew of, 1) Government mandating lower lending standards, 2) the Federal Reserve printing the funding for these loans, and 3) the artificial lowering of interest rates because of this counterfeiting, created mortgages that could not possibly be paid back. Banks got bailed out by the Federal Reserve’s purchase of mortgage-backed securities through their open market operations. These non performing assets (bad paper) were taken off of the banks balance sheets in exchange for newly printed reserves (money). Through the magic of 10% fractional reserve banking, read previous post here, these new reserves can be multiplied by a factor of 10x, and loaned out or used to buy Government Bonds which could then be sold to the Federal Reserve in their open market operations. This looks like a money laundering operation to me. Government and banks can receive unlimited funding through a scam like this, at our expense of course. We don’t even realize this happens because the costs are diffused among all of us and the benefits are concentrated with the Government and the banks.
Here are a few short articles I’ve found which show that no government action happens in a vacuum. From EconomicPolicyJournal.com, Why You Might Only Be Able To Get Part – Time Work In 2013, and also The Bernanke Push, and also World Bank: High Food Prices Are The New Normal.
The first is about the consequences of Obama Care on business hiring practices. The second and third are about slowly creeping inflation which is the result of money printing by central banks.