. . .
Q “The FDIC can simply print money.”
B “Maybe. However, the response to the Big Jolt may be . . . nuanced? By the government? Let me explain. Or at least confuse the issue.”
. . .
Q “By any metric – economically, morally, psychologically, ethically, metaphysically, generationally – TARP was a grand fraud perpetrated on the American people. And the central message is crystal clear – everyone in power knows that there are no limits or restraints of any kind to government criminality at the top. They can simply print money.”
B “Maybe. During what I call the Financial Crime of 2008, the government could have nationalized the banks, but those in power allowed the banks to nationalize the government, in particular the Federal Reserve and the Treasury Department. The Fed and Treasury now have carte blanc to do anything that serves the interests of their Owners on Wall Street and with the Big Banks. However, the FDIC may not have that absolute freedom and immunity from liability and accountability. The bureaucrats in the bureaucracy at the FDIC bureaucracy may behave like bureaucrats. Some risk-averse bureaucrat may seize up and say that she or he will not make the decision to commit the agency to exceed its authority because he or she may not have enough stroke to obtain immunity.”
Q “The most risk-averse course of action still is to print money or create electrons.”
B “Maybe. The Owners have agreed that ‘bail ins’ are the answer to their self-created problem. At some point, however, even J. Q. Public may say ‘bastante’ and swing by the bank and demand his or her deposits.”
Q “They will hand out a plastic card in lieu of physical cash. Print money or produce plastic. There is no difference.”
. . .
B “Maybe. Except that the fundamental problem today is not liquidity, it is solvency. The system is insolvent. Printing more money is akin to distributing cigarette butts. The bucks, like butts, soon will not be cherished.”
Q “At that point, we may be bartering cigarettes.”
B “Maybe. If they are available.”
. . .
[See the e-commentary at (M)End The Fed (July 11, 2011).]
Bumper sticker of the week:
Give a man a gun and he can rob a bank; give a man a bank and he can rob the world