The government has now become the bank of first choice for just about everyone it seems.
So much money has been laid on the line for various bailouts that taxpayers, you and me, have effectively become bankers…in this case, lending (giving) our money or the promise of our money to banks and lending institutions.
In the latest development, the Federal Reserve is undertaking a staggering $800 billion plan to buy up mortgage related debt….money will also be used to back consumer loans, as Reuters reports.
Who would have thought only months ago that what began as a subprime mortgage crisis would spread like a lethal virus, consuming whole economies along the way.
Some European nations have slumped into likely recessions…even China’s usually expanding economy is apparently going to expand a great deal less in the months–maybe years—ahead.
Where is the money coming from?
That’s easier than trying to figure out where the money is going to and how it is actually being used.
Simply put, the money is coming from the federal government–us—and the government can’t run out of it because it can keep printing more money.
Inflation is not the main concern of many economists right now, nor of President Bush or President-elect Barack Obama.
But it will be one day…and maybe sooner than people think.
Remember, this fiscal crisis exploded in a relatively short period of time; the world is moving at a faster rate than ever before.
While it may seem premature, it is probably a good idea now to start thinking about inflation. It is bound to happen. The only real question is how much?
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