The Economic Advisor

5 Reasons You Should Trust the Federal Reserve

1. The Federal Reserve is NOT a part of the government.

According to the pundits and numerous town hall participants, the government can’t do anything right. By this logic, the Federal Reserve (not being a part of government) should be competent and efficient. This isn’t a group of bumbling government workers. The Federal Reserve is simply an independent entity that has both public purposes and private aspects. It’s the best of both worlds.

2. The Fed has a direct “LinkedIn” connection with the Treasury Dept.

Let me ask you one quick question. If you had a relative that could hand you all the money you needed, whenever you needed it and basically for any reason, would that be a good thing for you? Of course it would. The Fed’s rich uncle Tim can fork over all the money it needs. (albeit via printing and borrowing) It’s common knowledge that the more money you throw at your problem’s, the quicker they get solved.

3. How quickly we forget the good times

Here’s a quick analogy. Let’s say you’re in high school and your parents are going away for two weeks. You have a cool friend who is 21 and willing to lend you all the money you need. He helps you buy a few kegs of Budweiser, hires a hip DJ, caters the party and for two weeks you are living the good life and creating memories that will last forever. It’s two weeks later, your parents come home and the shit really hits the fan. Is it fair to blame your cool 21 year old friend (who you now owe $15,000 plus interest)? It’s not his fault that he knows how to have a good time. The same is true for the Federal Reserve.

It seemed like yesterday that we were watching idiots flip houses in days and quickly becoming millionaires. Mortgage brokers were offering unbelievable lending programs and times were good. It is not fair to blame the Federal Reserve for the housing crisis. Sure they may have had a major part in creating the bubble, but they knew how to throw one amazing party. The Fed’s low rates helped us tap our homes like personal ATM machines and taught us to settle for nothing less than granite counter tops and stainless appliances. We have great memories because of the Federal Reserve-don’t forget that.

4. US & China-The Ultimate Mexican Standoff

People are quick to blame the Fed for dramatically increasing their balance sheet, damaging our relationship with China, defacing the currency and threatening hyper-inflation. Before you get too concerned just remember that the Chinese can’t dump our greenbacks anytime soon and they need to keep buying our dollars to keep up appearances for the rest of the world. If the dollar crumbles, they are screwed too. A new reserve currency is at least 10 years away and if I’ve learned anything, it is to pass off today’s problems to future generations. Right now it’s important that the government continue to spend their way out of this problem and our buddies at the Fed will keep rates nice and low. Remember, the Fed already announced that the recession is over. A few more Cash for Clunkers schemes, universal health care and green jobs will get America back to ignoring the government and spending money like drunken sailors.

5. Critics of the Fed are Conspiracy Theorists and Gold Bugs

Any criticism of the Federal Reserve usually leads towards a conversation about greedy international bankers, the problem with fiat currencies, and pretty soon someone starts talking about the moon landing being a hoax and how dinosaurs never existed. For every Ron Paul and Peter Schiff (who present legitimate claims against the Fed) there are thousands of Glenn Beck/Sarah Palin types that can be easily written off as ill informed and uneducated about monetary policy. By trusting the Federal Reserve, you won’t come off to others as being a “radical” with “an agenda to make sure the President fails.” Plus, the Fed already warned us that if we audit them it, “…could lead to a Congressional “takeover” of monetary policy that would be “highly destructive to the stability of the financial system, the dollar and our national economic situation.” So just sit back, trust the Fed and everything should be back to normal soon.*

*the term “soon” is not intended to reference any specific time in the near future.

Guy Bellefonte writes for My Pet Groundhog News.