De Graaf

Why Bailouts Are Not the Answer

Hi Peter,

Again, I totally agree with your perspective. But tell me, why don't the so called 'puppets with strings' don't see this and act accordingly?

Is it because they are not willing to encounter the political face loss. Or do they just love the remedy of debasing the currency patriotically and let the foreign lenders pay the (inflationary taxed) dollar bill.

My point is, that with this insane spending packages they come up with every week nowadays, there comes a moment in 2009 when the foreign willingness to back up Treasury is halted.
With inflationary practices the US Treasury tries to debase their currency with the smart tool of expanding the money supply. And you and I know that the inflation of our (world) currency is not measurable with tools. You can only see the effect of it.

The large indebtedness of the US consumer, and the state, its actually coming to the point of no return from what they are doing. Because this type of inflation the Treasury pursuits, faces another integrity problem and correspondingly; National security.

All this debt that fueled the American economy, is now being filled with an inflationary torrent, like you pointed out nicely. But add the fact that the same dollar is being funded by mostly foreign lenders, who are not yet feeling the effect of inflation in their hands. This is like a cigar from their own box!!

Only because the effect of inflation (higher prices with the same or smaller amount of goods) is not yet visible, and will not be visible for years! That is because of the debt position America is in. They now use 'their own' money (printing press money) to fill the debt bases gaps in the economy. Thereby NOT showing inflation. And in the meantime the lenders keep on propping up cash in Treasury bonds, now starting to show lower rates due to the Helicopter Bernanke.

Its insane! In 2009 or 2010 and far beyond their comes a Tsunami (T of Trillions) of inflated dollars on the markets, that instantly crashes the dollar currency. Thereby fueling havoc among the US foreign lenders.
I suspect it follows with great turmoil and political instability as governments fell into the trap of propping up a failed dollar. Just as the failed US economy right now.

There comes a time, this behaviour will be punished. And I don't like this development at all Peter.

Good article,

brgds