Last week, I began to explain what America might look like after a government collapse. I ended on a note about the Federal Reserve, and I promised I’d come back to it.
Well, here we are. And I’m going to begin with a radical statement:
The purpose of the Federal Reserve is to benefit its shareholders… not America.
This statement is confusing to most people because they assume the Federal Reserve is an agency of the government. It’s not.
In fact, it’s a private entity. Only the shareholders aren’t private investors. They’re the major “too-big-to-fail” banks of America.
The next thing you must understand is that the Fed was given (by Congress) the most lucrative monopoly on earth… total control over the creation of money. So it can print money, legally. What a business!
Now, don’t get me wrong – there is some regulation. What Congress gives, it can also take away.
The problem is that when you can literally create money, you have lots of cash to influence the system.
Indeed, when it comes to the economy, the Fed is even more powerful than the president. Only Congress and the president, working in unison, can check the power of the Federal Reserve.
And considering that such cooperation isn’t exactly the norm in D.C., the Fed is using its insane amount of power to rob you blind.
Too Big to Fail
Simply put, the supply of money should only grow at about the same rate as the economy. It creates a solid equilibrium between goods in the economy and the money supply.
But when the supply of money grows too quickly, it shatters equilibrium and leads to inflation (i.e. – too many dollars chasing too few goods).
And right now, we have too many dollars.
Of course, we can thank the economic crisis in 2008 for that. As you know, when the banking crisis erupted, the Fed was fearful that its shareholders were going belly up. So the former CEO of Goldman Sachs (GS), Hank Paulson, arranged for billions of dollars to be transferred from the government to these private banks through the Troubled Asset Relief Program (TARP).
Keep in mind, I believe allowing banks to go bankrupt would’ve been the best solution for America. We have over 200 years of bankruptcy court precedent, and the courts should’ve overseen the liquidation of these mismanaged banks. It ultimately would have punished the guilty parties.
But that didn’t happen. Instead, the Federal Reserve kicked into action. It created over $1 trillion that was lent to these same banks to keep them from collapsing.
Now, with so much money floating around, bank deposit owners are worried that the supply of dollars will outstrip demand. This could drive the price of the dollar down. In fact, I believe we could even see a flash crash of the dollar.
And that’s precisely how the Fed is stealing from you. It’s knowingly devaluing the dollar, so your money can buy fewer goods.
And no one is safe.
Say you’re happily employed – perhaps you even got a raise recently. Unfortunately, inflation can devalue your dollars so fast that you end up with less buying power than you began with.
As long as the Fed continues on its current path, we’ll continue holding a currency that’s worth less and less every day.
How Can We Protect Ourselves?
We’ll all likely get poorer unless we have taken serious steps to hedge ourselves.
Buying gold, stocks, real estate, and other hard assets is the best hedge. When the dollar crash comes, these assets will likely bounce back from the inflation, even if their prices decline at first.
Bonds, CD’s, and cash are the assets I encourage everyone to avoid. They’ll be crushed by inflation.
Once again, this is just a small part in the ongoing quest to see what America will look like after a government collapse.
Along the way, I want to explain what’s happening behind the scenes in Washington and give you as much actionable advice as possible.
This article originally appeared at CapitolHillDaily.com and is reprinted here with permission.
Please share this post with your friends and comment below. If you haven't already, take a moment to sign up for our free newsletter above and friend us on Twitter and Facebook to get real time updates.