Having already reduced the key interest rate it controls nearly to zero, the central bank has increasingly turned to alternatives like buying securities as a way of getting more dollars into the economy, a tactic that amounts to creating vast new sums of money out of thin air. But the moves on Wednesday were its biggest yet, almost doubling all of the Fed's measures in the last year.There you have it. MagicMoney at work again. Has nobody in the US's central bank (now there's a socialist term for you) heard of the inflation that comes with printing too much money? Anybody? Hands?
Never mind how the Fed is keeping interest rates artificially low. Never mind that the Fed's only real idea here is that the economy can be saved by increasing banks ability to loan out money to consumers - as if we actually need more debt - even though credit is a big portion of what got us here in the first place. Never mind that despite the government's "efforts," banks are lowering credit limits (one of my cards just got lowered by $400 for no real reason and with no notice) and raising interest rates and fees.
The government's "best efforts" are failing, and failing miserably at that. It is beyond ridiculous that the people this country elected (and in some cases, the people put into power because they were friends with the people we elected) refuse to sit down and actually think about a way to solve this problem. No, the government is, and has been since this whole thing started, is in reactionary panic mode.
Take, for example, AIG. Who hasn't heard of these bastards by now? We, the taxpayers, have pumped $180 billion into that company to save it from going under. Let's timeline this:
- AIG gets $85 billion in bailout funds
- AIG Executives take $440,000 taxpayer-funded weekend retreat, execs say they will do it again soon
- AIG receives second bailout of $37.8 billion, public outcry forces AIG to cancel second retreat
- AIG execs take $86,000 hunting trip, financed by taxpayers
- After meeting with New York Attorney General Anthony Cuomo, AIG agrees to reduce expenditures, including a $10 million severence package for it's former CFO. These cut expenditures include cancelling over 160 conferences/events that would have totaled more than $8 million.
- By this point, AIG has used about 3/4 of its $123 billion in bailout funds.
- AIG receives yet another $40 billion in bailout money. This comes after AIG posted a 3rd quarter loss of $24.47 billion dollars. In their press release, the Fed and Treasury state that this additional bailout is necessary "to keep the company strong and facilitate its ability to complete its restructuring process successfully." When did the restructuring begin exactly? This additional funding brings the total AIG bailout to about $163 billion, which means taxpayers own about 79.9% of AIG stock.
- AIG execs hold $343,000 seminar. Execs state that meetings like this are "necessary". AIG CEO issues a statement also calling the meeting necessary.
- AIG sends letter to NY AG Cuomo promising that the 7 top execs will not get bonuses. Everybody else will, but those guys don't get raises. Instead of bonuses, AIG execs get "Retention Payments". Because they don't make enough money as it is.
- AIG posts 4th quarter losses totalling a whopping $62 billion.
- AIG announces that it will use $165 million in bailout monies to pay bonuses. Lawmakers and taxpayers get upset. The sad part here is that the bonuses are being paid out to the executives of the Financial Products division, which was the division responsible for bringing AIG tumbling down. AIG says they have to pay these bonuses for retention purposes, and because they are contractually obligated to.
- NY AG Cuomo starts investigating, issues subpoenas. It is discovered that these "retention" bonuses are being paid to people who left the company.
- House Financial Services Subcommittee holds hearing about AIG.
- AIG CEO Edward Liddy requests half the payments be returned, calls payments "distasteful."
- It is made known that President Obama and Congress have been aware of these bonuses for months.
- Finally, the House and Senate both plan to vote for taxing any bonuses paid to AIG execs or any exec that works for a company the governement bailed out under TARP a whopping 90%.
Isn't all that exciting?!?!? Isn't it funny that despite the fact that our economy is taking a grand nosedive, we can focus this much attention on one company? Obviously what they're doing here is wrong, but there's a bigger picture to all this. These bailouts aren't doing anything to stimulate the economy. The news is riddled with sotries about banks using bailout funds to fill their own coffers, not to provide money to customers, as the bailout funds were designed to do. You have companies like AIG abusing the money we are giving them. The bailout plans are obviously failing, so we instead just pump more money into things like buying securities and bonds, using money that actually doesn't exist. Both plans, the bailouts and the buying, hinge on the idea that we can "make" as much money as we want, but here is a simple fact: every dollar printed reduces the global value of the dollar. When you print trillions of those dollars, just think of how much the value of the dollar is going to plummet.
I would call yet again for America to start paying attention to what is happening to the country around them. Apathy no longer cuts it - we all need to be involved or this country is going to keep right on spiraling out of control. You can start educating yourself and immersing yourself in ideas and solutions at the Campaign for Liberty.
There's my rant for the day. A thank you shout-out to The Consumerist who do a great job at tracking these things, and all issues relating to consumers, and being snarky about it.
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