Recently in the news there was a lot of furor over AIG giving out millions in bonuses to some of it's top executives. I don't want to get into the argument of whether that was correct or not, I'm sure there are many opinions on both sides.What I want to point out today is something that many of us missed. While the left hand was waving for our attention the right hand was doing something else that the dolts in the media didn't see.
While the spectacle of Chris Dodd stuttering uncontrollably as he tried to explain his way out of allowing the AIG bonuses without throwing the Obama administration and Timothy Geihtner under the bus was amusing. It served to dupe the one-sided media types.
What didn't get reported this weekend and last week was the fact that the Feds decided to throw and additional $1 Trillion dollars at the market and made an additional $6 billion dollar commitment to keep buying MBS (mortgage backed securities).
Sounds good right? What's so bad about that. Well I'll tell you. They don't have the money ...or should I say WE don't have the money to do this with. So the printing presses were pushed into full gear and just to top the bad news off with more bad news... ready...
We used the freshly printed money to buy our own debt. Now in the real world this is essentially like 'kiting' a check. You know, you go down to the bank and you deposit a check from your own account back into that account.
You don't really have an extra grand in the bank but for a brief while the books show that you do. The government just did that. I dare you to try it! They would nail you for fraud and throw you in the slammer for sure!
But the hypocrisy of all this nonsense is not the worst part. The worst part of all this is that we know, everyone with any common since and historical economic knowledge knows that printing money devalues the currency and leads to inflation.
Our only saving grace is that monetary policy with regard to printing new dollars has been relatively tight over the years and we are in a recessionary time, so maybe, just maybe we make it without getting dinged to hard this time.
It's scary out there. While things should start to improve, we won't see real improvement and wealth generation until the bureaucrats and blow-hards in Washington quit with their Tax & Spend ways.
America, this is our wake up call! We can't spend our way out of the mess this time. We need to save and our government needs to save along with us. It's time to STOP spending money we don't have.
That's my opinion, I welcome yours.
Posts
