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  1. #1
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    Fed Pledges Top $7.4 Trillion
    Nov. 24 (Bloomberg) -- The U.S. government is prepared to lend more than $7.4 trillion on behalf of American taxpayers, or half the value of everything produced in the nation last year, to rescue the financial system...

    Bloomberg

  2. #2
    ABW Ambassador purplebear's Avatar
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    ouch

  3. #3
    ABW Ambassador Sheri's Avatar
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    I don't mean to come off looking like an idiot, but can someone explain this to me? Just what it might mean for me and if I will even notice that this has happened.

    Thanks!

    Sheri

  4. #4
    ABW Ambassador Sheri's Avatar
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    OK - so that didn't make me feel any better.

    Will I actually see that money or is it somehow just used on my behalf as part of an overall solution? If I get it, then I have to consider it income and pay taxes on it next year?

    I don't have much credit card debt so I guess that part isn't much of any issue. I do have a mortgage, but it is not in any danger of being foreclosed on, so should I be worried about it?

    Sorry for so many questions....just feeling a little in the dark here and I feel like I need to be understanding all of this better.

    If you're too busy to answer that's fine...just if you have a minute.

    Thanks.

    Sheri

  5. #5
    Best New ABW Member 2007 sfcom's Avatar
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    I would like to know how the government will avoid lawsuits regarding their apparent "cherry-picking" of the companies in which they choose to "save." When considered "too big to fail" where exactly is the cutoff? Are five 10,000 employee companies just as important as one 50,000 employee company?

    -sfcom


  6. #6
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    Sheri:

    They were talking about this on FOX News this morning.
    Stuart Varney indicated that it will be "sometime down the road" when we will really feel it in the form of higher interest rates or a devalued dollar.

  7. #7
    Full Member Greywolf's Avatar
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    Sheri,

    In addition to the devalued dollar (also called inflation), the Fed pumping more capital into the markets will lead to the next boom, and then the next bust. What some call the economic cycle. Austrian economic theory talks about this relentlessly, and believes the only cure is to back fiat money with soemthing tangibale, like gold. If you really what to dig deep into Austrian monetary theory geekdom visit mises.org.

    The simple answer to your question about your mortgage though is no, you don't have anything to worry about.

    GW

  8. #8
    Full Member Greywolf's Avatar
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    One more thing, and Haiko I assure you this is not a political statement, but the constitutionality of the Fed is also a question that citizens should be concerned about. According to the U.S. Consitution, only congress has the authority to pass spending bills, which are then signed by the President of course. Which is why treasury needed congress to authorize spending $700 billion, but the Federal Reserve can expand the money supply through the issuance of debt. This essentially devalues the money supply as previousely talked about. Where in the U.S. Constitution is the Federal Reserve? cricket, cricket...yeah, it's not there. The Fed has enourmous control over the financial stability of the U.S., and actually the world economy as we have seen, but operates outside the constitution and outside the control of congress. Some small time congressman from Texas had this to say about it:
    [sorry - link removed]

    Added the text
    Mr. Speaker, I rise to introduce legislation to restore financial stability to America's economy by abolishing the Federal Reserve. I also ask unanimous consent to insert the attached article by Lew Rockwell, president of the Ludwig Von Mises Institute, which explains the benefits of abolishing the Fed and restoring the gold standard, into the record.

    Since the creation of the Federal Reserve, middle and working-class Americans have been victimized by a boom-and-bust monetary policy. In addition, most Americans have suffered a steadily eroding purchasing power because of the Federal Reserve's inflationary policies. This represents a real, if hidden, tax imposed on the American people.

    From the Great Depression, to the stagflation of the seventies, to the burst of the dotcom bubble last year, every economic downturn suffered by the country over the last 80 years can be traced to Federal Reserve policy. The Fed has followed a consistent policy of flooding the economy with easy money, leading to a misallocation of resources and an artificial "boom" followed by a recession or depression when the Fed-created bubble bursts.
    Last edited by Adam Ward; November 24th, 2008 at 11:27 AM. Reason: It was too political - imo

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