Homestead mailing list

[Clansgian AT wmconnect.com]

> >Does this have anything to do with the 'bailout', or is it in addition 
> to the bailout? Everyone is panicking about $700 billion, and they slip 
> $630 billion through with little notice? Is this unusual or do they do 
> this kind of thing all the time and just not tell us?

It is not part of the bailout, which at the present time is toast, that could 
change, some version of it might be resurected.

The bailout would have created treasuries for which the US government (taxes) 
are responsible.  Has to be paid back and with heafty interest.

When the Fed does its thing, it is creating money in the form of debt to 
other entities, but not the government or taxpayers.  The Fed can only create 
money when it finds someone who is willing to borrow it and swears to "pay it 
back".

And yes, they do it all the time.

The entities for whom the Fed creates money basically say they are going to 
create something, goods and services, that are as valuable or more valuable 
than the money being created for them.  So that money is supposed to 
prepresent 
some intention at and prosepct of agriculture, enterprise, or such.  If they 
fail to make good on that promise, then there is more money but the same 
amount 
of goods, and this is what causes inflation.

But the proposal for the Dept of Treasury to take on $700B has basically the 
opposite effect.  It proposes to mop up that much of the above mentioned 
money 
that did NOT result in any good or service for the folk (failed mortgages) 
and get them out of the money pool.  You, by they way, eat them.

James   </HTML>