Be prepared because once the Treasury Secretary is done inflating the value of worthless assets $700 billion may only be the first installment ...
One of the topics we discussed in yesterday's program was Sections 132 & 133 of the Bailout bill. In essence, these sections give the Treasury Secretary the authority to revalue or fix the prices of assets that have no real market. Why do they have no real market? Because the system was driven by people playing monopoly with Legos. When credit dried up no one wanted to step forward and keep the monopoly game going. When there are no buyers there is no market. Pretty simple, right?
The logic of the market says the people who created the mess should lose their shirts. This will set prices right. Here's former presidential candidate and current Congressman Ron Paul discussing the matter with Fed Chair Ben Bernanke.
You got that? Under the guise of "price stability" the Federal Reserve - and the U.S. taxpayer - are going to bailout stupid people who made stupid decisions while they played monopoly.
The incredible thing is that we've already provided hundreds of billion in credits to the financial sector through the Federal Reserve since last year (a process I began posting on last December). This means that $700 billion is really the second installment of an on-going bailout process.
So this is what we have. An installment bailout plan ... and the authority to inflate the value of products that have no real market today. And we pay for it all. How neat is that for Wall Street?
My friends, the authority to unilaterally inflate the value of assets means $700 billion is not a ceiling, it is a floor.
Oh, and our national debt just passed $10 trillion last week.
- Mark
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