The FED bought Trillions of dollars of debt from the banks and they will soon buy more. Yet it will NEVER filter into the real economy nor reduce the debt-load of asset holders. THE FEDS MONEY WILL NEVER HELP THE ECONOMY
I HAVE A PLAN that would BAIL OUT EVERYONE and not JUST BANKS.
GIVE EVERY HEAD OF HOUSEHOLD ONE MILLION DOLLARS. That’s right. There are provisos that I’ll describe in a second.
WHAT ABOUT INFLATION? WON’T A LOAF OF BREAD COST $3000? In the Wiemar Republic and Uganda there was rampant inflation because the money printing was injected everywhere. Everyone got their hands on the newly printed cash and everything was wildly diluted.
WHY ISN’T THAT HAPPENING TO US NOW? You’ll hear many old timers talking about how money printing will assure rampant inflation. It just is not so in this circumstance. You see, the dilutive digi-money created NEVER SEES THE LIGHT OF DAY into the real economy. IT STAYS LOCKED IN THE CLOSED LOOP OF THE ASSET BASED FINANCIAL SYSTEM. The only inflation suffered is through the rising prices of commodities due to the forced search for return because of ZIRP.
So, give everyone a million dollars under the following conditions:
YOU CANNOT SPEND THE MONEY. IT IS ONLY USED FOR THESE FOUR REASONS:
Mortgage debt. Credit Card debt. College debt. Medical debt.
YOU CANNOT USE THE MONEY FOR ANY OTHER REASON.
Do you see what this does? It is not inflationary because the money does not flood the system. IT IS ALL PAID TO BANKS except the healthcare part.
SO INSTEAD OF ALLOWING JUST BANKS TO DE-LEVER YOU ALLOW THE CONSUMER TO ALSO WIPE THE SLATE CLEAN.
This is unprecidented. It will be called Socialist to the extreme. It will be called ridiculous. But do you have a better way to de-lever individuals, small businesses and banks all at the same time? Especially when the FED will give away trillions anyway?
ADDENDUM: All debt must have been incurred BEFORE January 1, 2012.