EternalHoH
Posts: 791
Joined: 5/30/2010
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I don't know what to fear more, the Fed, or clueless voters demanding 'things' and not understanding the consequences of their demands.
You all do realize that an unregulated Wall St sold somewhere in the realm of $400 trillion worth of interest rate derivatives? And close to 80% of the Fortune 500 companies bought them. After all, what company wouldn't want to get paid by this so-called 'insurance' to make up the difference in increased borrowing costs when interest rates go up, right? Too bad this whole unregulated 'insurance' thing that Wall St invented turned out to be a ponzi scheme. As it was unregulated, there was no requirement to have the cash reserves on hand in order to pay when the need to pay all those 'claims' was called upon (and at $400 trillion, thats roughly 6 to 8 times the total wealth of the world anyway, this could not have been done under any regulated insurance program). And in any system where you end up paying 'insurance' claims strictly out of revenue from recent sales of more of this 'insurance', well that's the classic definition of a ponzi scheme. And that's what Wall St was running. And unfortunately for the US taxpayer, the US Treasury now owns the kingpin company that sold the lion's share of this ponzi scheme 'insurance' (the others imploded by themselves and don't exist anymore, they went *poof* one day).
$400 trillion is slightly more than half of the $700 trillion of all derivatives out there. In contrast, the derivatives in the housing sector, investors who wanted this ponzi 'insurance' to pay them when poor people defaulted on mortgages and turned their financial securities based on those mortgages into dogshit, amounted to only $60 trillion of that 700 total. It was only 9%, compared to 60% for interest rate derivatives.
And your $700 billion bailout, its only a drop in the bucket. Laughable.
So how do we raise interest rates to fight inflation when the economy recovers and not trigger all of this bogus 'insurance' from becoming payable? Does the taxpayer really have $400 trillion lying around in a warchest somewhere? Does anybody (outside the Fed) know just how much of these bogus interest rate 'insurance policies' were bought up for pennies on the dollar as "toxic assets" by either the Fed itself (quietly, using their money) or the Treasury (publicly, using your money)?
Obama (and any future administration) has but 3 choices,
A) NEVER recover the economy on Main St to keep inflation out of the system. This approach 'sacrifices' the 18% unemployed or underemployed. Funding soup kitchens with China's money becomes the safe course.
B) Recover the economy on Main St and get ready to pay when those remaining 'insurance' policies are triggered when you use interest rate increases to keep inflation in check.
C) Recover the economy on Main St and let uncontrolled hyperinflation run rampant because you cannot use your traditional inflation-fighting tools, devaluing the buying power of everyone, including those who are lucky enough to still be employed or still be living in their house.
So far, Obama has been running with Plan A.
Throngs of UNINFORMED voters, people looking out for themselves and nobody else, went to the polls last Tuesday and essentially said Plan A is unacceptable to them. Apparently, they don't like soup all that much. ..... So.....A few days later, 'Helicopter Ben" pulls Stimulus II from his pocket. Hang onto your seats, 'cause you are going for a ride. YOU wanted it.
Your enemy is NOT your spendaholic government and its laughable $15 trillion debt. Your enemy is Wall St. And don't forget that you, the uninformed voter, during your love affair with deregulation in the previous decade, enabled Wall St to do this. YOU voted in the people who took the leash off.
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