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Idaho's Weekly Journal of Local & National Commentary  Week 3714

 

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by Free Market Duck

Smoke ‘n Mirrors Economic “Stimulus” Package:
$600 for you, $730,000 for Fannie Mae & Freddie Mac
(Jan 28, 2008)

Lookie, lookie, in my left hand:  $600, free cookies for everybody.  Yippee for you!

In my right hand:  don’t look, don’t look, Fannie Mae and Freddie Mac bankruptcies bailed out by raising govt-backed home loan limits from $417,000 to $730,000.  Yippee for the bankers!

It is absolutely insane – and insulting to the American public – for President Bush, the leaders of Congress, Secretary of the U.S. Treasury Henry Paulson, and Fed Reserve Chief Ben Bernanke, to proclaim that they have magical powers to change Paper into Gold and that by injecting their Fake Gold into the economy, and convincing consumers to exchange this Paper between each other at the speed of light, they can enrich the economy.

Washington, DC – Has everybody gone insane?

   How can grown men and women – President Bush, Treasury Sec Henry Paulson, Fed Chief Ben Bernanke, and Congress -- stand up before the American people on national TV and proclaim that the issuance of 150 billion pieces of green Govt Paper – not backed by anything, not a promissory note, not collateralized by anything but thin air – can somehow magically obtain value by the mere act of printing and distributing it?

   Are we supposed to believe that value is instilled into Govt Paper, the U.S. Dollar, because civil servants printed it in some magic building or with magic printing presses in Washington, DC?  Or do the new U.S. Dollars obtain value because the Secretary of the Treasury sprinkled Holy Water on it?

  Or, are we supposed to believe that value gets instilled into the 150 billion Dollars in President Bush’s economic “stimulus” package at the point at which the consumer receives it?  Or the consumer spends it?  Are we supposed to believe that value pops into the U.S. Dollar when its expenditure by the consumers reaches a specific velocity?  At what velocity does money obtain value, or are there a minimum number of exchanges that the same glob of money must travel before it magically picks up value?

   Just when, exactly, and how, exactly, does Govt Paper, the U.S. Dollar printed out of thin air with no backing, suddenly obtain value by being dumped into the market?  Inquiring minds want to know.

   Or, is the Government tricking us?  Is it exactly the opposite of what they’re telling us?

   Hmm, let’s think about that, shall we?

   If the Govt issues billions and billions of non-backed paper, hot off the federal printing presses, does each unit of Govt Paper gain value or lose value?  If the Govt prints a quadrillion or quintillion or septillion pieces of green paper not backed by anything, is that not the definition of monetary inflation?  Or, put another way, is it not a deflation of the value of the unit Dollar?  Diamonds are rare; therefore expensive.  A grain of sand on the beach is cheap because there are so many of them.  Is there an analogy here?

   So, at what point, exactly, in all this issuing, printing, and spending of the 150 billion new U.S. Dollars, does President Bush and his cohorts in Congress, the Treasury, and the Fed Reserve expect us to believe the Dollar magically obtains its value?

   The answer is obvious:  it doesn’t.

   At no point in the above scenario of supposed “economic stimulation” does the U.S. Dollar obtain value.  In fact, it loses value by printing up so much of it.

   Once again, it is absolutely ridiculous for grown men and women to stand up on national TV and proclaim that Govt Paper has turned into gold.  It is absolutely insane – and insulting to the American public – for President Bush, the leaders of Congress, Secretary of the U.S. Treasury Henry Paulson, and Fed Reserve Chief Ben Bernanke, to proclaim that they have magical powers to change Paper into Gold and that by injecting their Fake Gold into the economy, and convincing consumers to exchange this Paper between each other at the speed of light, they can enrich the economy.

   This is not only ridiculous and insane, it is extremely stupid.  Want proof?

   Let’s say I’m a counterfeiter.  If the above “stimulus” proclamation by President Bush and his cohorts was true, then it follows that I and all other counterfeiters could simply inject our counterfeit paper money into the market with the Govt’s Paper money and also enrich the economy.  The consumers wouldn’t know which paper money was which.  There is no difference since there is no real backing for either and, therefore, the consumers could spend both the Govt and the counterfeiters’ paper money to enrich the economy.

   OK, you concede, there is no difference between Govt Paper and counterfeit Govt Paper because both contain the exact same attributes.  But, you whine, it’s not fair because the counterfeiters get to spend their new Dollars first and thus obtain an advantage over the rest of the consumers.  But wait a minute.  If that’s true, then it’s also true for the Fed Reserve and their member banks, too.  They are no more neutral spenders of the new money than ordinary counterfeiters would be.  The Feds print Govt Paper out of nowhere and get to spend it first, too, just like the counterfeiters.  So the member Fed Reserve bankers obtain an advantage over the rest of the consumers because they get the new fake money first.  In fact, we could easily draw the conclusion that the Federal Reserve is no different than ordinary counterfeiters.

   Therefore, we can conclude that all new counterfeit paper serves the very same function as the Fed Reserve’s non-backed Govt Paper; both are indistinguishable and both will produce the same results, which -- as you have already guessed -- is simply an inflation of the money supply, or a devaluation of the unit Dollar.

   However, continuing the Fed Reserve’s absurd proclamation that they can enrich the economy by injecting billions and billions of non-backed Govt Paper into the economy, we can think of faster and cheaper ways to create and inject the $150 billion in Funny Money.

   Why not let every consumer become a “legal” counterfeiter just like the Federal Reserve and save a lot of time by cutting out the unnecessary member banks as middle men?  The Govt can simply issue a “legal” Jr. Federal Printing Press to every good citizen in America so they can print up their own Govt Paper in their basements and thus “stimulate” the economy faster than President Bush and Congress.  Is this not faster and more direct – avoiding interest rates charged by the bankers for borrowing money?  Does not the Govt Paper obtain just as much value whether it’s printed in every good citizen’s living room as it does in a civil service building in Washington, DC?  Does it really matter where the Govt printing presses are physically located?

   Better yet, let’s skip the Govt Printing Presses.  We can just as easily, and more cheaply, reproduce U.S. Dollars on a color copier at Kinko’s Copy Shop than waiting 6 months for the U.S. Congress to crawl into action.

   Remember the stated goal by President Bush and the Fed Reserve:  get the new 150 billion Dollars into the hands of the American consumers as quickly as possible so they can spend it faster than a bat out of hell.  I am only suggesting there are much faster methods than using the current federal printing presses to increase the nation’s money supply and get it into the hands of the consumer.  After all, my plan is merely an extension of the Govt’s current economic plan to quickly “stimulate” the economy.  Why not start “stimulating” the economy by using hundreds of color copiers at Kinko’s?  By the way, Kinko’s is open 24 hours a day, 7 days a week for every good citizen’s “stimulus” package convenience.  What more could the Govt ask for than 24-hour stimulation of the market?

   Obviously this method is just as absurd as President Bush’s economic “stimulus” package to inject 150 billion pieces of Monopoly Money into the market by printing it on Government Printing Presses.

   In truth, the Federal Reserve is not magical and is nothing but a legalized counterfeiting ring authorized by our corrupt U.S. Congress to print up U.S. Dollars out of thin air, backed by nothing:  not by gold, not by silver, not by a promissory note, not by America’s GDP that, by the way, it does not own and thus cannot issue Notes against collateral it doesn’t own, not by real capital or capital goods.

   In short, the U.S. Dollar -- not redeemable in gold since 1971 -- is nothing but Pulp Fiction.

   So why the Big Brou-ha-ha by President Bush and his Economic Plunge Protection Team regarding Why We Need to Inject $150 Billion into The Economy as Soon as Possible?

   As always, we must Follow the Money (even if it is fake).

   The real reason that President Bush and his Economic Plunge Protection Team want to pass out $600 to every individual in the economy is not to enrich the economy by “stimulating” you to spend your Big Bucks faster than a freshly fornicated fox in a forest fire but rather to mis-direct you from noticing that the important part of their “stimulus” package – the part that doesn’t get talked about by the news media -- is the BIG BAIL OUT of bankrupt Fannie Mae and Freddie Mac.  That’s right, Margie.  Did anybody notice that – in between all the hype about the free cookies, $600, issued to you, the consumer – the REAL PROVISION of this $150 billion Smoke and Mirrors “stimulus” package is raising the Govt-guaranteed housing loan limits, so-called Jumbo Mortgages, from $417,000 to $730,000?  In plain English, that means the Govt wants to increase consumer debt by loaning – inflating -- almost double the previous amount of Govt-backed mortgage debt (backed by what I don’t know except more Govt Paper, which is why we’re in the current economic mess in the first place).

   That’s right.  The real reason for the $150 Billion Big Bail Out is not for you, dear consumer; it’s for the quasi Govt housing agencies, Fannie Mae and Freddie Mac, whose assets have crashed to 30-cents on the Dollar as a result of the Fed’s and investment bankers’ previous subprime mortgage slime.  In other words, the Govt wants to bail out Fannie & Freddie and the investment bankers and CONTINUE THEIR GOVT PAPER INFLATION VIA THE MORTGAGE MARKETS.  If these two agencies were private businesses, they would be forced to declare bankruptcy.  But now, President Bush and his Economic Plunge Protection Team – the same guys who continually intervene into the Comex gold bullion market from the Cayman Islands, trying to drive the price of gold futures down with questionably legal methods – must bail out Fan and Fred so the Govt can continue their hyper-inflation of the U.S. Dollar via the housing market.

   Surprise!  You thought the Feds wanted to give you $600 to “stimulate” the economy?  Sucker.  It’s all Smoke ‘n Mirrors.  With the left hand, they dole out $600; with the right hand, they bail out their buddies with $730,000, cover their tracks, and rev up more inflation.  Otherwise, the U.S. banking and monetary system will collapse.

   Yes, you heard me correctly.  We are in for yet another inflationary housing surge, if they can pull it off.  We shall soon see if Americans fall for it.

   If Americans do fall for more hyper-inflation of the U.S. Dollar by going further into mortgage debt with $730,000 loans at Low % interest, payable for the rest of their lives, the net result will be:  more price inflation of all goods and services, a de facto devaluation of the unit Dollar, higher unemployment, the price of gold and silver going through the roof, further economic deprivation for those on fixed incomes such as our senior citizens, chopping of many local govt services as tax revenues dry up, a huge recession, rations leading to a depression, riots, and martial law, and finally the total crash and burn of the Fake U.S. Dollar.

   How ironic.  President Bush’s economic “stimulus” package will bring about exactly the opposite of what he and his Economic Plunge Protection Team proclaim.

   All this because nobody can answer the simple question, “Where, exactly, does the value of our U.S. Dollar come from?” – FM Duck

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