The Button of Financial Doom
In case you missed it, the government pushed the Button of Financial Doom last week. It was an easy thing to miss. It is a small button, after all, even though it is red. I’m not certain if it sits on Geithner’s or Bernake’s desk, or maybe it is kept in a vault somewhere. But one of them pressed it. Or perhaps they pressed it together. And unlike the big red button, doom is not instant or nearly so when this one is pressed. Nor did the headlines read ‘Government Presses Button of Financial Doom’.
No, the headlines read ‘Fed to Buy Some Treasury Bonds’. Why is this the Button of Financial Doom? Isn’t this a good thing? Another market for the massive amount of T-Bills we need to sell to finance our spending spree? Um, no. This amounts to the time-honored tradition of PRINTING MONEY. What’s wrong with that? Well, when you print money you get inflation. Serious, rampant inflation. But what’s the worse that can happen? Inflation is better than deflation, right? Um, one word: Zimbabwe.
We started down that road last week.
Labels: money
posted by RAS at 9:30 AM
2 Comments:
Welcome to Multinational Corporate Socialism.
An analogy.
My neighbor has a small travel trailer that he has $1000 into (he thought he got a good deal for a hunting trailer). He wants some extra bucks for a project and offers me the trailer for $1000. I figure it is worth about $200-$300. So, we have the agreement that I buy the trailer for $1000 and he buys it back later on for $1200 (interest you know). Now, who in their right mind will pay back the $1000 + interest when it is only worth a max of $300? That is the situation the American citizens are in. We have paid good money for assets that are worth 1/4-1/3 their face value with the idea of making some profit (interest) on the investment later. Yeh, right! Let's see how that would work. If the trailer continues to deflate in value, I keep loosing big time. If the trailer inflates in value to over the $1200 value + interest, that means the $1200 I would get back is devalued also. Is this a sucker game? Give me a break.
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