Wednesday, November 26, 2008


Yesterday we were bombarded with government plans for even more huge amounts of money to be given to banks. As I forced myself to listen to the television news – BBC, MSNBC, CNN -- I heard the same message again and again:

The government must do something to get the public to start borrowing again. More billions of dollars will be given to the banks in the hope that they will begin to lend money and stimulate Americans to borrow. The people must be motivated to start using their credit cards more. America's financial future depends on more borrowing.

'Nov. 26 (Bloomberg) -- The Federal Reserve's new $800 billion effort to combat the financial crisis is designed to make credit more accessible to shaken consumers who aren't sure they want more debt.'

Why? Why give $800 billion more to banks in order to encourage the populace to borrow more money and safari farther into Darkest Debt? What is the magic of borrowed money?

If the object is to encourage Americans to start buying more, in order to stimulate the economy with consumer purchases, why not just give the $800 billion (and all those earlier billions in handouts) directly to American citizens? There are about 306 million people in the US, and $800 billion would give every man, woman, and child about $2,600.00. This would mean about $8000 in cash for a family of three. Could you use that this Christmas?

Given the choice, would you prefer to have $8000 free and clear, or to borrow $8000 on which you'll be charged interest that will require you to repay not just $8000 but more like $12,000 and up?

We're told that it wouldn't be safe to give the $800 billion directly to the people, because they might not spend it. Horrors! Save money. Only direct donations to Al Qaeda could be more unpatriotic.

The system is insane. The thinking that supports the debt system might seem insane, but I'm sure it makes sense to the banks who not only get money directly from the U.S. government but also huge profits in interest payments from the people who will rent that money from them.

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