With all the billions spent on the whole war on terrorism and on war itself, since 2001, and all the billions of the FIRST bail out , and now all the billions expectes for the new "stimulus" it seems there are no limits to the amount of financial paper (or rather electronic)exchanges that allow banks to make bookkeeping entries adding deposits and 'reserve' to their books.

What exactly or even a guess, is the limit of the amount the Fed can authorize? Why can't they keep pumping it out indefinately? After all, at this particular point how long would it take at current taxation levels to continue to pay 'normal' Federal annual entitlements AND PAY BACK the 'loans' that the Fed got out of thin air?

I'm so confused? Ignorant, yes - enlighten me.

I cant answer this.....

I can only say that if I kept my books the way they do.........

They'd put me in jail!!!!!!!!!!!!

its not about finances its about politics if this country were run like a business we probably wouldnt be either in this mess or as bad of a mess

AndyBgood,

I think the pic is a political statement reflecting the attitude of the previous administration.

Obama's people what to hear things. They send emails out and try to set up meetings to exchange ideas. He's listening. Bush didn't. He had the attitude of "if you're not with me, then you're against me".

There is no limit, this can kept being done indefinitely. It has nothing to do with taxes. The only interest we need to pay for this is the interest we decide to pay, this could be zero tomorrow, if we so desire.

Nogames,

Have you heard if this new package is getting money from China - like Bush's package?

Here is the previous political cabinet's statement...



and



What is the Capitol of Minnesota? Coca Cola?



Sphincter says "What????"

No idea of what you are talking about.

The bank bail out -- money was borrowed from China.

I didn't know if that was going to happen again.

O.K., (had to take a break), so now about exactly why it can go on forever, and how it works.

Where are the stimulus money coming from? The government.
Where is the government gets it from? Taxes? Nope. They make "new" money.

Amazingly, the majority of Americans do believe in magic. Particularly, in the magic by which the governments "makes" new money. It is magical, because the new money appears by a mere consensus of desire. Wouldn't you like to learn to do that? Do you need more money? No problem! Just make a decision and it is done, no actual work required.

Goofy, and yet, most Americans believe exactly that. So how does our government makes this new money?

The money that we hold today, is actually not money at all. To be money, something needs to be a store of value, besides being a medium of exchange. Our money does not store value. It only reflects how much value our government decided it should have.

Imagine that on every dollar bill that you hold, there is a little indicator that shows how much buying power this bill has. Say, currently, it shows something like "1000". The number matters not in and of itself, but when tomorrow it shows"500", this would mean that the purchasing power of this bill is only half of what it was today. And so it will obviously take twice as many bills to purchase something tomorrow, as it took to purchase the same something today.

The "volume control knob", or may-be it should be called a "power control knob" is in the congress. If they turn it down half way, every dollar bill in existence will show half of the power number it was showing before.

This is the meaning of what I have said above about our money not really being a money. This is because real money does not change its purchasing power at someone's whim. Real money store purchasing power. Today, real money is called "hard money", just so you know it still exist.

Now, how the "power control knob" works? How does it immediately connects to every dollar bill in existence, and changes its purchasing power? I have to simplify things a little, so that it doesn't take a thick book to explain.

Money, supposed to be a medium of exchange. Meaning that certain things can be exchanged for certain quantity of money. Consequently, all things that exist, together, must be exchangeable for all money that exist, or money would lose their meaning. That is, for instance, if we have total of 1 trillion dollars in existence, then one trillionth part of all the things we have (wealth) can be purchased exactly for one trillionth of all the money that exist, or, exactly one dollar.

Observe, that if I said 2 trillions in my example, then all the wealth we have would be exchangeable for all the money in existence, i.e. 2 trillions. So then, every dollar in this case, would purchase only one two-trillionth part of all wealth. In other words, if there is total of 2 trln dollars, you'd need two dollars to buy the same thing you could buy for one dollar when there was only 1 trln dollars in existence.

O.K. So far so good. Now let us consider the government "making new money". When they do that, they increase the total number of dollars that exist. So, if they printed so much new money that they doubled the total of our money, then all the dollar bills you have on hands or in accounts, now buy twice less.

This is how "power control knob" works. As long as you hold US dollars, the government is able to lower the purchasing power of your money as simple as turning down the power control knob. So, if you worked all your life, and have saved enough to keep you warm and decent in your old years, any part of it can be simple taken away from you as long as the congress decides to do so. If they want to take away a third, they just print up a third of what already exist. If the want to leave you with only one tenth, then they simply print up ten times of what we had before.

Therefore, what you hold, is not money, but only a fiat as in "something that is assigned value at a whim, or by a decree". This is why our "money" is properly called Fiat money.

Now, why is our government doing this? They are politicians. They need to perform the magic for the masses. If masses want a stimulus package, for example, then this means that the government is going to "give money to be spent as stimulus". But before they can give, they need to make it. They print whatever the amount that they need to spend, and give it to whomever they want, or spend it themselves.

If they print up so much as that they double the total amount in existence, then we already know that all the money you hold will lose half of it's power. But where did it go? Well, it went to give a meaning to the new money that the government is going to give away to somebody else. In other words, by this clever process, the government just took half of the purchasing power that we all had, and concentrated it in the newly printed money that they now hold!

And you are talking about taxation? Taxation is nothing comparing to this printing business, for no one can hide away or have a say about it, again, as long as he holds US dollars. Any amount of purchasing power can be taken away in this matter, any time it is desired.

How long can this be kept going? As long as you hold the dollar. Only when people stop holding it, and switch to other type of money, there will be an end. Otherwise, it can be done forever. The government can forever be halving the purchasing power that we have, and it will never reach zero, because even if it reaches 1/100000 of what it is today, it can still be halved further.



Whoa. Tired of typing. I sincerely hope this helps to understand how paper money work, and why governments LOVE paper money.

A lot of the money from TARP went to foreign Banks who had bought mortgages from American Banks.
The foreign banks actually made a profit off the mortgages using our money.
Congress tried to ensure this would not happen but Bush insisted. Rather than waste time the congress made deals but finally agreed to allow it.

Hate to tell ya but China owns us at this point.

I don't track that.

It doesn't matter if it is borrowed or not, it will still have to be printed up. Borrowing is only a misdirection.

Let them come and collect...

I'm sure a warm reception can be arranged with them...



led by Quentin Tarentino......

I would just hate to see us having to pay back China with even more money for even more generations.

Foreign banks loaned the money, right? Is it wrong for them to expect a profit? That is why there is such an act as loaning, to make a profit.

Now, you're right, we didn't have to pay them back, we could have defaulted. The result of such a default would be in that the interest rates demanded for a loan next time, would be significantly higher, to compensate for the higher probability of some loans to be defaulted upon. Same as why stupid people pay higher interest rates, - to compensate for the higher risk.

I happen to think that higher rates, a significantly higher rates are exactly what we need, and in this regard, I have to agree that we shouldn't have bailed out foreign banks. But others may think that we need lower rates, and thus they implicitly support the described bailout.

LOL

The original TARP bill proposed by Paulson and Bush included this provision. Although Congress quickly rejected it. It does make one wonder..


The original plan would have granted the Secretary of the Treasury unlimited power to spend, proofing his or her actions against congressional or judicial review. Section 8 of the Paulson proposal states: "Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency."

This provision was not included in the final version.

Thankfully!!!