posted on Aug, 29 2009 @ 07:06 PM
reply to post by cnichols
My opinion is the following: the intention is to create a kind of "two-tiered" economy where at one level, a tiny, tiny number of people and
institutions get basically unlimited wealth on demand and would (in therory) be able to boost their already enormolus holdings an order of magnitude
or more to literaly unimaginable levels of wealth.
Meanwhile, despite the massive credit creation, the plan would call for inflation to be kept minimal through lowering wages and rasing taxes on the
middle/working class, keeping the "average american" in a state of debt and near-poverty, constantly on edge and fearing the loss of his job and
equity every day. They will also try to keep the massive injections being pumped into financial institutuons from "leaking" into the "real
economy" by refusing to lend to individuals and small buisinesses, etc.
It won't work for three reasons.
A) The money will leak in to the real economy eventually, sooner probably rather than later, because thats just what happens when there is massive
B) So much US debt is held by foreginers and there is so much interconnection that most large banks, companies, and even the US govt itself can't
function without foreign borrowing. Savvy foreigner investors, central banks, and soveriegn wealth funds, etc. have already been badly burned and have
much less trust in the US system than they used to. They will thus will be a lot less hesitant to put their foot down on rampant credit creation if
they they think it will damage their holdings, or they will simply stop buying US bonds and currency (already happening). The US has handed them
leverage and they will increasingly use it.
C) If inequality gets bad enough, people simply won't stand for it and you will see tax revolts, either violent or simply people refusing to pay. You
could see real civil disorder and poplist backlash if the difference in wealth grows large and conspicuious enough. A lesson seemingly forgotten again
and again by elites of every stripe throughout history.
[edit on 8/29/09 by silent thunder]