Ok, so everyone is pointing out that this $700 billion bailout scheme is a catastrophe in the making. I completely agree. What are the measurable consequences going to be over the next few months? Few care to speculate on this because of so many variables, but what, if anything, can we be sure of at the very least? I will offer a few layman observations:
1. The $700 billion cannot be raised through tax increases; I doubt if americans will tolerate any hike in taxes that can effectively fund this monstrosity. And fiscal transfers are out; themoney just isn't there. This will have to be printed on fresh paper and pumped out like there's no tommorow.
2. The value of the dollar will plunge to record lows (emergency lows?), sending prices for everything into the stratosphere. Depending on the government response to this, they might set off a worldwide depression by trying to hold prices down.
3. Long term, the great collapse will be successfully be diffused throughout the entire economy, while the power and assetts of a handful of economic elites are safeguarded.
Feel free to scrutinize. What are your predictions?
Bosco
Bosco: Ok, so everyone is pointing out that this $700 billion bailout scheme is a catastrophe in the making. I completely agree. What are the measurable consequences going to be over the next few months? Few care to speculate on this because of so many variables, but what, if anything, can we be sure of at the very least? I will offer a few layman observations: 1. The $700 billion cannot be raised through tax increases; I doubt if americans will tolerate any hike in taxes that can effectively fund this monstrosity. And fiscal transfers are out; themoney just isn't there. This will have to be printed on fresh paper and pumped out like there's no tommorow. 2. The value of the dollar will plunge to record lows (emergency lows?), sending prices for everything into the stratosphere. Depending on the government response to this, they might set off a worldwide depression by trying to hold prices down. 3. Long term, the great collapse will be successfully be diffused throughout the entire economy, while the power and assetts of a handful of economic elites are safeguarded. Feel free to scrutinize. What are your predictions? Bosco
Sound just about right. We can't predict exactly what will happen, but it sounds like you've got the gist of it.
"As long as there are sovereign nations possessing great power, war is inevitable."
The FED has lent out over $700 billion THIS PAST WEEK. As I understand, they are monetizing even more stuff - that went to morgan and goldman. The bail-out plan will have to be picked up by credit - maybe Gates and the League of Rich Guys will make a power move and buy the US government...more likely foreign. But with the US's credit rating facing suffering already, who knows?
And the bailout plan is going to end up MUCH more than the estimate.
With a pure money multiplier if we've still got the same reserve requirements, that's like $20 trillion over 4-5 years. Mises TMS is at $5 trillion. Dollar's world reserve currency status is done.
Helicopter Ben is about to strap on his aluminum foil hat and make it rain.
Check my blog, if you're a loser
From Wikipedia......."US$ 700 billion of illiquid mortgage backed securities with the intent to increase the liquidity of the secondary mortgage markets and reduce potential losses encountered by financial institutions owning the securities"
Basically the Fed will be buying the mortgage backed securities that have tanked recently and led to the downfall of the mortgage market. No one will really see the effects of this until all of the chips settle, because the MBS that the government is buying have the opportunity to actually make money. If the people who owe on these mortgages actually make their mortgage payments, the government will get the money, which may recoup some of the losses. On the other hand, if people dont pay their mortgages....why are they still living in these homes?