posted on Oct, 1 2008 @ 08:30 PM
Hello all. Im new to ATS, but I wanted to post this and basically just have my say.
Many people are in a panic right now because of the economic recession. Several banks have fallen, (Lehman Bros. and Washington Mutual are examples)
and people are scared of another depression. Congress is currently (10/1/08) trying to pass a bill that will "bail out" the crashing banks. I wish
now to dispel any misconceptions and/or lies that have been told to you up to now, and what I believe to be the best possible outcome for our
The bailout plan involves the acquisition of 700 billion dollars of "mortgage backed securities" or mortgage loans, held by our banks and gives them
to the U.S. Treasury. This is supposed keep our banks from collapsing under the weight of their own debt. Presently there has been no word of where
this money will come from. It may come from taxpayer money, which will increase the 10-trillion dollar public debt (probably to 11 trillion), or the
money may be printed, which will cause hyperinflation and dramatically reduce the value of the dollar.
Looking back on history we can see two relatively recent examples of economic collapse, the Great Depression and the fall of the Weimar Republic, each
collapsed in a uniquely distinct way. The Great Depression was caused by a stock market crash and bank collapses, which caused money to stop flowing
in our economy, and the Weimar Republic collapsed because of hyperinflation, which caused their money to become worthless, even as they tried to force
more and more of it through their economy.
So what does this mean? Well the best way to explain it is that in a Great Depression style collapse you stand by and let capitalism run its course.
No bailouts, no printing more money. The banks fail from their own stupidity and no one can save, access, or transfer funds, no cashing checks, no
investing, you only have the cash in your wallet and sock drawer. However that money is still meaningful useable cash. The remaining mom and pop
businesses and common citizens can still carry out transactions the day after the collapse, because the physical money left in the system still works.
In a Great Depression style collapse, the economy is only severely damaged. The common citizen and enterprising entrepreneur can still, eventually,
start up a new economy and banking system because that foundation is still there, a stable currency.
A Weimar Republic style collapse takes a different approach to handling debt and failing banks. In an effort to keep their banks from falling, or to
make payments on debt they print piles and piles of new cash and try to make payments with that. This is the result of poorly-thought out planning
made with panicked logic. The fact is that currency is just not numbers on a bank note, or shiny round coins. Each coin, each digit is a
representation of our nation's wealth, expressed as a fraction. A penny is an infinitesimally small fraction of the United State's wealth. As our
nations wealth rises and falls, or is affected by tremendous debt, our currency becomes more or less valuable than before. As proof of this, some of
you may have noticed that our currency is now less valuable than Canadian currency. This is because of our massive public debt and failing banks.
There is less wealth in our nation, and fewer people (nations) now trust our currency. This is the reason that printing massive amounts of new money
is generally a bad idea. As we print more and more money, our wealth is divided more and more times into each new piece of currency, lowering the
value of that piece of currency. This causes poverty for the entire nation, as the currency become worthless. You pay 2x, 5x, 10x as much for the same
things you had to buy earlier, and workers no longer want to work for the now worthless currency. In a Weimar Republic style collapse, not only the
banks fall, but the people as well.
(continued in next post)