Friday, 19 September 2008

US government bailouts - LOLtheFED

I thought this deserved it's own post so I moved it. This kind of stuff just makes me kind of pissed off and it's not even in my own country. So sad to see how uninformed people are to the workings of their own government and national financial systems.

I just saw on CNN that the US federal government is now set to take over $10s of billions in bad mortgages (Edit: it is now confirmed that Bush is asking for a whopping $700 billion). Wow. This is what happens when you let a private group of banks aka The Federal Reserve control the nation's currency (misleading name 'eh? Nothing Federal about it and nothing in Reserve to back up the currency).

Just so you know, private banks generally try to make themselves money, not protect the public interest. And then you get the moral hazard effect because you have banks bailing themselves out by printing money out of thin air and loaning it to themselves. They can take all sorts of crazy risks because the buck is always going to be passed on to the tax payer.

When they say on the news that the federal government is bailing out these banks and insurance groups what does this really mean? The federal government has no money to loan out besides what is supposedly in the treasury that is supposed to be used to run the government, military, and services they provide. In reality they borrow from the FED as well so it's oxymoronic to call this a government bailout when the government has no money to bail anyone out. This is a FED bailout, passing the debt on to the "government" ie. the tax payers.

Kind of weird how the banks can loan money out to the public and private corporations, screw up and lose it because they are reckless, print more money to cover losses and charge you the interest on the money they just created to bail themselves out. You wind up with the FED and the government saying, "National Debt? Inflation? How did that happen? We have to throw more money at it to avert financial disaster," like this totally blindsided them instead of actually fixing the system, ie. get rid of the FED and revert to the pre-1913 sound financial policy. I'd like to see the results of a poll asking people whether they think the FED is a federal government agency or a group of private banks. People don't listen:

"If the American people ever allow private banks to control the issue of their currency, first by inflation then by deflation, the banks and the corporations will grow up around them, will deprive the people of all property until their children wake up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."
- Thomas Jefferson

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