US Budget Deficit: The Biggest Scam in History

Everyday in newspapers or television we read or see that the US government is bringing out some bailout plan or the other. But most us (at least me) wonder as to where can it bring such large amounts of money. One very obvious answer would be,"Well, the U.S. governement owns the Fed and the mint, so they print more money." Those who give this answer should realize that printing more money leads us to one of economics most basic principles,"Too much money chasing too few goods." The natural corollary of this would be inflation and in some cases even hyperinflation. 

This is what happened in Germany after the World War, Argentina and more recently Zimbabwe. Germany after the World War was bogged down by the enormous amount of debt levied upon it by the victors. The result was that three years after the World War, one dollar was equivalent to 2.5trillion marks (I took the e.g. from a documentary called The Crash The Coming Financial Collapse of America)

1$=2,500,000,000,000 marks

After the Oct bailout the US budget deficit has ballooned to $11.3 trillion. The following graph show the burgeoning US budget deficits over the years and the projected numbers. 

So what does the U.S. government do to mange the the same. The following are the points that were shown in the video mentioned before:

1. Temporary Budget Extensions
2. Use funds from the Social Security Trust
3. Transfer budget overuns into the next fiscal year
4. Shift budgets like the Gulf war off budget

All these methods do not lead to reducing the deficit rather they are used to show smaller numbers in the country's accounts so as to maintain investor faith. A point that can now be raised is can't the other major financial powerhouses (read countries) bring this out. Well why should they? Almost all of the foreign exchange reserves of the various countries is held in dollars. So if even let's say Japan wakes up one fine day and suddenly decides to convert all its reserves into some other currency, it would lead to such a hue and cry across the globe that in the end even before Japan converts all its reserves anything in dollar would be worthless. And that is why we find investors and countries alike running to invest in US T bills even after the US markets tanked.

And that is why I term the US budget deficit as the biggest fraud ever.

How Green is Green?

We (anybody related to the finance field) have always had the notion that the only benefit out of investing in green energy or socially responsible companies is the moral satisfaction that one obtains. To be a successful banker you have to invest in firms that bend the law a little for their gains. We call this as Conducting ethical business in an unethical environment.

So I guess all of us wanna be "Wall Street bankers" should be ruthless in our investment decisions. That was what i perceived before I heard about Socially Responsible Investing Funds. So what kind of funds come under this category. Basically, SRI funds follow three basic norms: Environmental, Social and Governance (ESG). Any fund that invests in companies involved with green energy, or have good labor practices, or any fund that does not involve in companies involved in liqour or gambling etc. comes under this category.

When I first read about these SRI funds during my internship, I had felt that this would be another passing fad in the investment world. Still i decided to work on it for my project. I classified them on the basis of the class they belonged i.e. A,B,C,Institutional or No load. In the beginning itself, I was told that the returns SRI funds provide are quite lower as compared to the conventional funds. But the results I obtained were startling.

As the graph here shows, SRI funds have outperformed traditional mutual funds in both long term and short term. I have taken only the No Load category here because apart from A class funds this was the only category which had sufficient data. 

Given below is comparitive performance analysis of SRI funds with its peers and indexes.

	Total Returns YTD	Total Returns 3YTD	Total Returns 5YTD
Mutual Funds A	-11.015	8.8	9.935
SRI Funds A	-4.345	5.24	8.175
Mutual Funds No Load	-11.085	6.24	8.905
SRI Funds No Load	-1.3	7.64	9.655
S&P 500	-13.07	3.85	7.05

Now the cynic in all of us might say,"Hey the returns may be a little high but the risk involved with such funds is even higher." Well, here's the answer.

As you can see, the median risk is higher in case of traditional mutual funds rather than SRI funds. I don't say that this result is conclusive but still it is an eye opener to the fact that being ethical in one's investment decisions need not be a financially unsound decision.

So the new financial mantra of the 21st century should be Go Green Go.

Who am I????

Can someone out there please tell me which of these is a Pakistani, whom I want to kill? I am an Indian who thinks every Pakistani is a terrorist and wants to take revenge for the Mumbai carnage. Are you as perplexed as I am?

Well then can somebody atleast please tell me which of these is a Muslim?

This is what I am trying to say. No f*****g person can differentiate between us, the people of the Indian (& Pakistani & Bangladeshi) subcontinent. Then why are all of us out to murder every last person in the neighbouring country. After the recent Mumbai attacks, for the first time in my life I said to hell with all the Pakistanis, kill those bloody b*****ds. But as the days have passed by, I have realized that I am no better than a "Jehadi". The name that signified a "righteous warrior" is now synonymous with a petty "mercenary'. 

I might have not killed anybody but my thoughts and my actions have started spreading poison. So am I a Jehadi too, a petty mercenary?

I am not trying to make people see the light. I just want everyone Indians, Pakistanis and Bangladeshis to realize that I can be your son, your brother, your husband. I can't change the rigidness of the old. I want the youth to see that the grudge your and my parents might hold for or the person they visualize, I am not that. And when we, the new generation realize this, we can make sure that no other Kasav (the terrorist caught in Mumbai, he is the same age as my younger brother) is born among us not out of need, not out of greed.

I want to who I truly am. An Indian, a Pakistani, a Muslim, a Hindu or just a young guy who wants to fulfill his dreams. Please help me.........