$7.4 Trillion

November 24, 2008 at 11:18 pm (Banking Crisis, National Debt)

$7.4 trillion is the new number for the money the Fed has spent to solve the financial crisis.  Naturally, I’m using the world “spent” creatively, since of course they didn’t have the money to begin with.  I suppose “written $7.4 trillion IOUs” would be a more accurate description.  And those funding the IOUs won’t do so for much longer.  Asia is waking up to the fact they’ve been had.  This is a lot of money, considering it took us 225 years to bring our national debt to $5 trillion (the number at the dawn of Bush Jr’s presidency).

Then again, it’s only dollars, whose value is established entirely by the Federal Reserve — in this case, not even the ink and paper it’s printed on, since most of those dollars won’t actually be printed.  Right now, the value of the dollar is flying high.  That’s due, however, mostly to the fact investors and nations around the world have had to sell things of value (oil, grains, metals) to get dollars in order to settle their bad debts, which everyone now has hordes of.  This artificial value won’t last for much longer because ultimately, a currency is only as strong as the workforce and industry behind it, and, well… our industries are about 70% service-oriented (which means useless).  In fact, the largest moneymaking sector of our economy was just that — making money by helping others make money, which is proving to be a very shaky profession when “money” is discovered to have questionable (or no) value by itself.

Ever think you’d see the day when the US went begging to the Middle East for money?  How the mighty have fallen.  Not that this is any surprise to the tireless bell-ringers who have been warning about our unraveling monetary system for the last couple of decades.  In the midst of all this talk of bailing out the car companies, I thought this address before Congress from the last time we had to bail out an automaker was particularly relevant, though it’s from 1979.  Ironically, the same person is still in Congress speaking out against the bailouts, and the company in question (Chrysler) is again in need of a bailout.  Sigh.

A video of Peter Schiff, who was Ron Paul’s financial advisor, has been making the internet rounds.  It’s great fun to see all the supposed experts puffed up on themselves and their secure system, mocking him for his dire predictions from a few years ago.  I’ve come to realize the more arrogant and egotistical someone acts when deriding an unpopular opinion, especially on the news, the more likely they are to be completely wrong.  Enjoy:

Today’s article of doom: Mayor of New Orleans illegally confiscated firearms from private citizens during Katrina (arguably, the one time people needed them the most).  Foreshadowing of events in the future, as our economic “Katrina” hits?