Friday, March 06, 2009

Faith and Credit

Have you ever read something and shuddered? Boy, I just did. Basically, the FDIC, the federal insurance agency for covering deposits held by banks going out of business, stated this week that they will likely run out of money by the end of this year without new, higher fees charged to those banks that are still solvent. In other words, the agency that gives the federal government the ability to say, "Don't freak out and rush your bank, we've got your deposits covered," may not be able to do so without a lot of help. That in itself is a shudder-able statement...

However, the wonderful congress of the United States, who lately seem to have figured out that money does indeed grow on trees, "'cuz as long as we got us some paper, we can print all we want!", have proposed to borrow out an additional $500 BILLION to help the FDIC. The spokesman for the FDIC had this to say on the subject (and thus, the shuddering followed closely behind):
The FDIC is "backed by the full faith and credit of the United States government," Gray said. "We can and always will be able to meet our obligations to depositors."

I think that speaks for itself, but allow me to point out two words that are clearly frightening - "faith" and "credit" - especially in regard to the United States government. I don't know about you, but my "faith" in the United States government, much less its financial ability to do anything, makes me want to pull my money out of the banks and hide it under my mattress. However, it's the "credit" of this country that will make such an action pointless since we will likely be paying $200+ for a loaf of bread in the next couple of years if we keep wrecklessly spending money like we are. And that's assuming the nice countries out there who obviously only have our best interests in mind keep buying all that debt up.

So to follow those two words in their context with, "We can and always will be able to meet our obligations to depositors" just seems preposterous unless taken in the context that your deposit will be completely worthless by the time you withdraw it.

I dunno, I'm sure I'm overreacting, but pulling piles of bills worth hundreds of billions of dollars out of our behinds seems to be getting ridiculous, and I don't care how well or targeted you spend it. I have no idea how this will all catch up to us in the end, but the vision of men grabbing their stomach and loins in a similar way to labor pains begins to come to mind. Wailing and gnashing of teeth?? Dentists will be capping a lot of them assuming they could even get paid for their services.

End of Rant

4 comments:

{Amy} said...

Did you see the Glenn Beck's video on the US Spending? If not, I'll send you a link that's pretty shocking.

Mikeesee said...

I think I just watched it... Is it where he's showing a chart of money in print by the US and how it's similar to the "hockey stick" diagram that Al Gore uses for global warming? Scary... "The Inconvenient Debt"

Lyndell said...

The National Flood Program ran out of money after Hurricane Rita. Souldn't be a surprise, because they try to keep the rates low; too low to pay for the risk.

100% reserve banking wouldn't have a problem with runs.

Mikeesee said...

testing...