My brother is one of the smartest person I know and here he puts the bailout in straight-talk.. talk, setting a perspective that I see but could never put into words so easily understood:
To bailout the banks, the US government is about to print out $700 billion worth of money. Now remember, this $700 billion is backed by no intrinsic value. Not by gold, not by foreign reserves. It is just an addition of $700 billion to the money market out of thin air. Imagine me writing a $700 billion check (when I don’t even have $7) and you and the rest of the world accepting it because you think I’m good for it. Yeap, that’s how it is.
[...]
The banks are failing and the stock market is nose diving.
By all accounts, they are technically insolvent.
AND YET…..
The US Dollar appreciated over other major currencies in the past two weeks.
Honestly I think everyone is the world is quite a moron for ascribing so much value to pieces of paper. Even more ironic is that the more paper money they print, the more valuable people think it gets.
If it was any other country that were in that situation, they would have been knocking the doors of IMF for a rescue plan now.
Not for the mighty US of A though.
I hope he doesn’t mind that I stole and posted this for the world to see. If he does…eh. He can come box my ear come wintertime.
The part I never got was WHY people think the more money gets printed, the more valuable it gets.
a case of double-think?