Thursday, December 18, 2008

When will these Government and Stimulus Packages End?



What the Hell is going on here? When will these government Bailouts and Stimulus Packages end?

The Fed has expanded their Balance sheet from 800 Billion Dollars less a year ago to 2.2 Trillion Dollars today. The Fed has slashed interest rates to a new target of 0% to .25 % the lowest in its history. The talk of systemic risk and avoiding the collapse of the entire financial system is the justification used for government intervention. That sounds reasonable enough. Who wants to see the entire financial system and economy collapse to bring about "The Great Depression 2".

The economic situation is calling for every industry to reach out and seek government help in what has become a race to convince the government why they need money, and exactly how much.

President Elect Barack Obama has called for a massive new stimulus ranging from 700 Billion to even up to a staggering 1 Trillion Dollars. The Strategy of racking up debt to stimulate businesses, consumers, credit and the housing market is what the government is relying on.

This leaves many questions unanswered. First will this actually work? What are the long term consequences of such a monetary policy? How will hitting the printing press and creating new money affect the value of the US dollar? What are the real costs of this monetary and stimulus to the American Tax Payers? For every Dollar of this Stimulus how much actually goes towards the intended purpose? How are the government agencies going to be held accountable for the use of this money? How is the Government going to promote entrepreneurship, innovation and prosperity by giving money away?

Finally the question no one wants to ask is: What happens if this does not work?

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