Trust

We have seen the results of the carnage created or being created by Stanford Investment and Bernard Madoff's firm in bilking investors out of billions of dollars. This has caused most investors to loose faith and trust in our financial institutions. By observing the posturing and mistruths of our government leadership ("there is no pork in the stimulus bill"), it is difficult to maintain faith in what government leadership says vs what government does.

It has been my experience that once faith has been lost in anything, nothing will be able to replace it. This translates to faith in a friend, faith in a leader, faith in a business, faith in our legal system, or faith in our government. Once we have lost faith, faith will never fully return. There will always bee a nagging doubt, and caution, in dealing with the entity that has caused a loss of faith.

Now, take a dollar bill out of your pocket. That dollar is backed by the full faith and trust in the US Government that issued the "Federal Reserve Note". As opposed to the former Silver Certificate issued many years ago that could be traded for actual silver, this note can be traded for anything you and I, both operating with the same or similar levels of faith, think this Federal Reserve Note is worth.

The US Government has just issued another trillion plus of these notes because the leaders in our government wanted to put as many of our population into slavery to the US Government as possible so there would be full and complete dependence on the government, the party in power, and the president. Nothing different than a slave working for the 'massa', and a slave working and voting to keep the political group in power so they can continue to rely on the government 'massa' to take care of them for life. Certainly these slaves should not have to do anything themselves to improve their lot such as work or gain more education. They just have to breed and show up to collect their dole from their 'massa'.

This will work as long as the world investment community believes and has faith in the Federal Reserve Note being a sound investment and worth something.

But what happens when, one day, you or I wake up and say "I no longer believe that the Federal Reserve Note is even worth the paper it is printed on?

Would this mean that the US government then have to have the entire population working for the US government. Would this mean that this government doles out food, medical care, housing, and status to the slaves depending on their affiliation to the leadership of the political party in power? In this scenario, faith is bypassed. Without the individual having to make economic decisions, and suffering when the decisions are bad, the government then can decide what cars will be designed and driven, where your kids will be educated, what your kids will be taught, whether or not you will be eligible for health care provided by the government. The government will decide where you will work and for what wage. As in the past, your wage credit will be good only at the government store. The Internet will be policed, as will be radio and TV so no disruption thoughts will be unleashed on the slaves that might cause a potential revolt.

Oh wait!

That sounds like China, Russia, and Cuba about 15 - 20 years ago. Now, by giving our manufacturing base to China, they own a key source of our wealth. Russia has tilted toward an entrepreneurial society, but is having trouble throwing off the last vestiges of communism. Poor Cuba has yet to figure it out. Limited government with limited taxes, a strong unwatered down currency, sound education in the basics, individual freedom in financial decisions, coupled with the risk and reward of those decisions, is what drives a country to prosperity.

So - do you maintain your faith in our government? Do you maintain faith in our government leadership? Do you maintain faith in our financial institutions? Do you have faith in our currency? I would suggest that if you can not be positive in your faith in our government and its leadership, you can not have faith in our currency. If you do not have faith in our currency to be something of value, then why should the lenders in other countries, that are keeping our economy afloat such as it is, continue to lend their hard currency to us and purchase our T Bills?

What are your thoughts?