Bailout...explain TWO things for me.

Wobbie

Since I can't get this from the mainstream media, I go to the Pit for my political/economic analysis.

1) When they say "paid for by the taxpayers," what do they mean? Higher taxes for everyone (next year) or just a re-allocation of money they already have? (is there any?)

2) When they say the money might be paid back (highly dubious), again, is this money back to taxpayers or just money back to the federal coffers?

Strangest Tribe

The best way to look at this is our country needs a loan to make repairs.
The government is asking the people for this loan. This doesn't mean taxes will go up next year.... but in 2 years who knows?
We could borrow from other nations but at what cost?
Our government can borrow from the people interest free...so why not?
The only problem is after 8 years of war and several national disasters the people don't have the money either. So essentially we are given an IOU as they dip into other accounts and agencies to further deficit spend.
They gave us a stimulus check and then ask us for it back 5X within 6 months.

All the while our nation's oil companies are recording record profits large enough to cover the loan the government is asking for.

It's a smoke screen,...... and more fearmongering.

DriftingByTheStorm

imalive wrote:

Since I can't get this from the mainstream media, I go to the Pit for my political/economic analysis.

1) When they say "paid for by the taxpayers," what do they mean? Higher taxes for everyone (next year) or just a re-allocation of money they already have? (is there any?)

2) When they say the money might be paid back (highly dubious), again, is this money back to taxpayers or just money back to the federal coffers?

Anything that gets added to the national debt is effectively owned by the taxpayer.

This bailout will either be paid for by some combination of currently circulating treasuries and cash or from fresh printed notes, either way it will be a liability against the Federal coffers. If the money to pay for this does not come from existing currency in circulation (and it is interesting to note Bernake claims this to be the case), it is "printed" by the Federal Reserve. If it is new money "off the presses" it serves as a dilution of the dollar value of all current dollars. Supply\Demand dictates that more dollars chasing the same amount of goods equals dollar value goes down\ price of goods goes up (really one and the same) -- usually known as "inflation".

An increase in the Federal debt itself is most often synonymous with inflation as well ... while there are a few other ways the debt can increase ... by and large the number one culprit is the printing of new money in to the economy ... as each dollar put in to circulation is "backed" by one dollar in treasury bills (federal debt).

Fun stuff huh?
Yeah. I hate fiat economics too.
:(

ps - strangest tribe is right. simplisticly (and accurately) speaking, this is one giant loan of sorts. at SOME point in the future the tax payer will fill the weight of this.

Wobbie

Strangest Tribe wrote:

Our government can borrow from the people interest free...so why not?
The only problem is after 8 years of war and several national disasters the people don't have the money either.

By "the people," do you mean the Treasury?

DriftingByTheStorm wrote:

This bailout will either be paid for by some combination of currently circulating treasuries and cash or from fresh printed notes, either way it will be a liability against the Federal coffers. If the money to pay for this does not come from existing currency in circulation (and it is interesting to note Bernake claims this to be the case), it is "printed" by the Federal Reserve.

How the fuck is it that we can just "print money?" I mean, you and I work for money but the goverment can just produce it? WTF? I actually got a degree in Economics (yeeeeeeeeears ago) and I don't get it.

I heard it explained that we have to loosen credit to keep the economy going. I don't get that either. I know that not everyone pays cash for everything but, you know what, maybe we should? Get a job, buy what you can afford and pay for it!

polaris

imalive wrote:

I heard it explained that we have to loosen credit to keep the economy going. I don't get that either. I know that not everyone pays cash for everything but, you know what, maybe we should? Get a job, buy what you can afford and pay for it!

the idea with credit and the economy is that many businesses operate using credit whether it be buying stock or meeting payroll - without that credit, these businesses cannot operate resulting in loss of jobs and so on ...

FiveB247x

1) This is two-fold. Firstly, any bailout funds are taken from the tax payers (whether already collected or in the future). Obviously, the gov't handing out billions of dollars will alter the national economy, our future debt and future allocation of funds.

2) When people refer to money being paid back in some form, they mean the companies which the government is bailing out with funds, would be responsible to pay back to government at some point in time. It'd be closer to a loan than a handout.

imalive wrote:

Since I can't get this from the mainstream media, I go to the Pit for my political/economic analysis.

1) When they say "paid for by the taxpayers," what do they mean? Higher taxes for everyone (next year) or just a re-allocation of money they already have? (is there any?)

2) When they say the money might be paid back (highly dubious), again, is this money back to taxpayers or just money back to the federal coffers?

Kann

imalive wrote:

By "the people," do you mean the Treasury?
I heard it explained that we have to loosen credit to keep the economy going. I don't get that either. I know that not everyone pays cash for everything but, you know what, maybe we should? Get a job, buy what you can afford and pay for it!

All debt is not bad debt, borrowing money is vital for the economy. Most business wouldn't run without credit, just like most people couldn't buy a house without borrowing money. It doesn't mean it's wrong, but you have to be careful to keep your debt under a limit, for isntance 30% of your income.

2) When they say the money might be paid back (highly dubious), again, is this money back to taxpayers or just money back to the federal coffers?

Your government is so much indebted that any money that might be made from this bailout (in a few years) will be used to pay back the debt. While it won't go directly back in your pocket, repaying the debt is beneficial for the tax payer, at least imo.

DriftingByTheStorm

imalive wrote:

How the fuck is it that we can just "print money?"

Just watch THIS movie, and you will understand everything.

acutejam

Strangest Tribe wrote:

... All the while our nation's oil companies are recording record profits large enough to cover the loan the government is asking for...

You confuse "earnings" for "profits." Their earnings could concievably come close, but then they have to pay their rents and payroll and bills and what not. And they'd like to keep paying for more exploration and more research into all those new energy sources we're clamouring for.

Their profits fall well short of $700 Billion.

polaris

acutejam wrote:

You confuse "earnings" for "profits." Their earnings could concievably come close, but then they have to pay their rents and payroll and bills and what not. And they'd like to keep paying for more exploration and more research into all those new energy sources we're clamouring for.

Their profits fall well short of $700 Billion.

i wonder what the total would be if you aggregated all the upper mgmt salaries and bonuses??

acutejam

I'll wager the salaries and bonuses of the oil industry execs pale in comparrison to the salaries and bonuses of the investment banking execs. And I'll further wager that there's a LOT FEWER execs in the oil industry making those bonuses than there are in the banking industry -- less certain on that point, but I'd make the wager.