Do You Trust Your Government?

By: ispeculatornew
Date posted: 12.28.2011 (6:00 am) | Write a Comment  (2 Comments)

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A few weeks ago, I wrote a post about how to invest when our country is going bankrupt. Still to this day, I get comments, reactions and ‘tweets” almost every day. It does seem like many are worried about these types of scenarios. One of the things that concerns me the most is that I don’t trust the government would ever tell us if things did get serious… Or they would, but only when it would be too late. Right now, tens of European leaders continue to work on finding solutions for countries like Greece, Ireland but also the big ones like Italy and Spain. We know that Italy is paying almost 7% of any newly issued debt and that such a rate is unsustainable. But do you feel like the Italian government would ever tell its citizens if things got really bad?

History Says It Wouldn’t

Look at recent economic or financial issues such as Argentina and Russia and you’ll see that those that were taken by surprise the most were the citizens of those countries. Obviously, it’s easy to understand why. The whole system, from banks to currency and the government is built on one fundamental; trust and confidence in the system. For example, if banks only hold a few % of the deposits that you and I made (they ledn out the rest), it does not take that many people withdrawing all of their money to create major issues. The whole system is built that way.

Is The Truth Hidden?

Remember all of the huge discussions and debates that occurred when the government did a $700B bailout package? Many were against it but in the end, it was judged that it was better to go ahead. What is less clear now that this has been made public is why the Fed made nearly 10 times that amount, $6.8T, available to financial instutions. Why? Many believed that the whole system was on the verge of a collapse and that huge banks could start going down left and right. I don’t think anyone would ever say that letting that happen would have been the right thing to do. It might have made things even worse to let everyone in on the real story of how bad things truly were.

But I Still Wonder…

What other things do we not know right now? How close is Europe from collapsing and what kind of consequences would such a failure have? I don’t know about you but while I’m not going to start a panic movement, and accumulating food and water in my home, I do keep this in mind when deciding what to do with my money.

How about you? Do you trust your government? Do you consider such things when deciding what to do with your money?

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2 Comments

  1. Comment by Winn @ Stock Income Method — December 28, 2011 @ 11:34 pm

    Thank you to bring this up.
    I believe most people know that truth is hidden because they don’t want to create panics. Personally I don’t trust the government because our government is on huge debts right now. That is why we need to take care of our self financially. When things getting tough you can save yourself. Always save for the raining day that is what my parent always tell me. Although I believe the government will take care of you with aids they may give out fund when we in tough situation like food stamps etc… However what if the government running out of money? Does the government ever running out of money? Off course not because our government can print more money. The downside is that increase inflation and our purchasing power will decrease substantially. So always prepare in case of worse thing happen.

  2. Comment by IS — December 29, 2011 @ 7:55 pm

    @Winn – So would you recommend having reserves in several currencies?

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