Dr. Marc Faber, the investment guru, concluded his monthly bulletin with the following comments:
“The federal government is sending each of us a $600 rebate. If we spend that money at Wal-Mart, the money goes to China. If we spend it on gasoline it goes to the Arabs. If we buy a computer, it will go to India. If we purchase fruits and vegetables it will go to Mexico, Honduras and Guatemala. If we purchase a good car, it will go to Germany. If we purchase useless crap, it will go to Taiwan and none of it will help the American economy.
The only way to keep that money here at home is to spend it on prostitutes and beer, since these are the only products still produced in the US.
I’ve been doing my part…..”
Nothing to add here.
When you’re going to spend $700 billion, you may want to make sure you know what you’re doing. This is why the White House has appointed capable staff to run the Office of Management and Budget. From their first memorandum:
“As you know, the President and Congress are working together on an economic recovery
package that will serve as an essential step in fighting off the most serious economic crisis since
the Great Depression. Although the details of the bill are not yet final, the President and
Congress are committed to spending recovery dollars with an unprecedented level of
transparency and accountability so Americans know where their tax dollars are going and how
they are being spent.
Meeting these commitments will require sustained focus by managers throughout the
Federal government, particularly in planning, awarding, managing, and overseeing contracts and
grants. Departments and agencies should immediately begin developing plans for allocating
workforce resources to meet recovery-related responsibilities and for mitigating potential
Now, guess who they picked:
Peter R. Orszag is the seventh Director of the Congressional Budget Office. His four-year term began on January 18, 2007
So, what did this guy do before that?
“Director, Competition Policy Associates, Inc. (Washington, DC); May 2003â€“January 2007;
Senior Director, Sebago Associates, Inc. (Washington, DC), March 2002â€“January 2007;
President, August 1998â€“February 2002. Clients included the World Bank, Nordic Council of
Ministers, Governor of California, Central Bank of Iceland, Government of Trinidad and
Tobago, National Collegiate Athletic Association, and businesses ranging from small
companies to the Fortune 500 corporations.”
You can’t make this up, can you…?
Congress approved the $700 billion bailout approved. The Fed now says they will provide $900 billion as loans to banks (interesting typo in the original article).
Can someone please explain where the additional $200 billion come from?
There is one more item that worries me in that article:
“The Fed also said it will begin paying interest on commercial banks’ reserves, another way to expand the central bank’s resources to battle the credit crisis.”
Wait – they print new money that the US taxpayers vouch for, then they create more money for the part that banks don’t use up immediately???
Yesterday I started watching Zeitgeist: Addendum II (which I think you should watch, too). The part I link to explains the concept of fractional-reserve banking, basically how money is being created out of thin air. I think it’s also worth mentioning that the Federal Reserve is more likely to expand the amount of money than, say, the European Central Bank.
I’m just a layman here, but it seems to me that already the US GNP is in a bad relation to the amount of money. If that amount increases, even more, would that not mean a risk of hyperinflation?
This makes my head hurt. Can somebody please shed a light on this?