Does this cartoon seem to fit the economic situation today?

From Drop Box

I'm still amazed that every dollar added to our economy is created from debt. That's right, when our Government, and it's private, super-secret partner in crime the Federal Reserve, want to create more money to "bailout" or "stimulate the economy", it creates bonds (out of thin air) and sells that debt to either interests in the US or in foreign markets (China/Japan). China is currently the largest holder of US debt at over 1 Trillion dollars. Yes, we owe China over 1 Trillion dollars and borrow 3 Billion from them a day just to fund our deficit spending. Think about that for a minute. What would happen to you if you even had to borrow $300/day to keep living your current lifestyle? What you borrow more to get yourself out of trouble? No.

I'm not sure what the future holds, but it can't be pretty. If China suddenly decided that it wanted to collect on all these debts it has been buying from the US, a MASSIVE sell-off of the U$D would happen and the value would drop tremendously. What does that mean exactly? It means that the US would have to print a lot of new money (turn on the printing presses) to pay off all of this debt. We obviously don't have this money (otherwise we wouldn't need to borrow it in the first place). The US wouldn't be on the line to purchase all of this debt back, as other foreign entities would auction for it with the Chinese. The Chinese may not get 100% of the debt back, but they would sell off the US Bonds to the highest bidder. It looks like supply > demand for the USD. Can anyone tell me what happens when supply > demand? That's right Econ101 students; the price/value of the item being sold decreases. The dollar's value would decrease causing massive inflation. Of course, SOME of the bonds would be bought back by the US and we would have to print money to pay for them. So let's see:

1. ebay style betting for US bonds and treasury bills
2. drives down the value of the dollar (supply > demand)
3. US prints more money to pay for the bonds
4. again, drives down the value of the dollar (inflation)
5. your money = worth less

Looks like that's the 5 easy steps to hinder the good American saver....YOU and ME! What have we done to deserve this you may ask? I tell you NOTHING. I haven't done anything. I've saved, payed off my credit cards, paid off my car, worked hard, saved, didn't buy a house that I can't afford, didn't over extend myself and have always lived within my means. Oh yeah, I've paid ALL of my taxes on time even though I despise them. What have I gotten in return? I've lost 50% in my 401k and will be hit with MASSIVE INFLATION in the future.

Remember, the Government is BROKE. They have NO money. The only money that they can spend must be created 1 of 2 ways:

1. Create more out of debt (see paragraph 1)
2. Increase taxes

I don't know about you, but it seems that the Federal Government got caught with it's hand in the cookie jar with a mouth full of cookies. They are in a mess, and they know it. Spend Spend Spend can only prolong things. It's the small hit of crack to get you through the day. What happened to savings, personal responsibility and living within our means? President Obama recently said that American families are doing the right thing by cutting back, saving more and tightening their belts, yet the Fed Gov spends more than ever. Does this sound hypercritical to you? Is the only way for us to get out of this recession really for our Fed Gov to spend more?

The only reason that the US is still the super power of the world is because we own the bombs. In 2008, 68% of our Federal Budget was spent on the Military. Now, ask yourself, why was so much spent on the Military? What's going on here? Don't believe me?? Check this out!! Has anyone warned us about the Military Industrial Complex before?

We are bullies, and there's no denying it. I welcome the new era of US history, where we don't have the means to push people around to get what we want. Welcome to the reality that all other countries live in, America.

-Desh

PS: Please contact your representatives to support Ron Paul's bill HR1207. This is very short, and they should be able to read the whole thing (unlike the 1000 page bailout bill). This would give Congress the right to audit the Federal Reserve. You know, the private, super-secret organization that creates and controls all of our money. Yeah, we don't have the authority to actually audit them, and see what they are doing....

Today, at 9:30 Eastern, the House of Representatives Financial Services Committee held a hearing with United States Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke over the status of the multi-billion dollar bailout. The House Democrats questioned the decision to give AIG $40 billion more and whether to use part of the remaining funds to help stem foreclosures instead of injecting the money, as the bill was written, in to the banks to help unfreeze the credit market. The debate was pretty heated at times with Barney Frank interrupting Secretary Paulson mid-sentence on several occasions. I'm glad that someone is pressuring Paulson and Bernanke, but this was a bit rude imho.

As you may well know, my approach would utilize more of the Free Market theory, but I do understand that it was not the Free Market that got us here in the first place. This makes it very hard for the Free Market to correct itself without hurting MANY people and companies in the process. Unfortunately the current bailouts and stimulus plans are only prolonging the hurt just as they did during the Great Depression.

I am a bit uncertain of the conditions in which the House Democrats wish to use the money to stem foreclosures, but I did hear Barney Frank mention reducing the mortgage value (lowering the amount owed on the mortgage) or issuing new mortgages with lower interest rates.

I'm confused...
Weren't artificially low interest rates partially to blame for getting us in to this mess? So let me get this straight; we are correcting the current excess lending problems by injecting more money in to the banks to be leant out by the same people that got us in to this mess in the first place?

Like I said, I could be confused, and could be completely misunderstanding Mr. Frank, but this just seems to be disastrous. If this is the case, I regret being fiscally responsible in my decision to not purchase a home the past few years seeing that Big Brother may bail ME out.

When Jesus Obama takes the wheel everyone will line up for a little government bailout, but is this the true salvation? NO, this is called Tax and Spend economics. YOU will be taxed, and THEY will be spending. This is not good for our market, nor our freedoms, nor our country as a whole. When the government bails out, they essentially own a part of that company/industry. I'm not trying to become a conspirator, but I HAVE read 1984. When government is given a little power, in times of a crisis, it rarely gives that power back. Remember 9-11? I'd love for each of you to take a picture of your smiling mugs the next time you are going through security at the airport. [/sarcasm]

The world was astonished at Washington's self-removal from the national stage. When King George III was told in 1783 that Washington declined further power and wanted only to return to his farm, he declared, "If Washington does that, he will be the greatest man in the world." Washington returned to his farm. Washington would have been astonished that we have developed a governmental system where people are politicians as a lifetime occupation and profit handsomely thereby.

What Would the Founders Do? - Richard Brookhiser

This crisis is only a little different than 9-11, with respect to the economy. After 9-11 there was MUCH hope that the economy would rebound because it was a terrorist attack that caused the sudden drop. Now it is of our own doing. The difference is the amount of [consumer] confidence now vs. then. People had a positive savings rate in 2001, which is not the case in 2008.

http://mwhodges.home.att.net/family_a.htm

With less savings, of course, comes less confidence. People [should] become tighter with their money, but this just doesn't seem to be the case.

http://mwhodges.home.att.net/family_a.htm

This is simply amazing. We are no better than our Federal Government!!! I don't understand how we expect to continue to be the most free and prosperous people/nation in the world when we are addicted to CREDIT!

This ties back to my original point about reducing the mortgages of all the people that are about to foreclose their homes. Yes, I have a heart, and I also understand that part of these people have lost their jobs because the economy has forced them to lose their jobs, but let's not forget about all the people that were falsely approved for home loans because of the Community Reinvestment Act. It is neither mine, yours, or the Federal Governments responsibility to bail you out of a house payment that you cannot afford. This is simple Free Market law. Bankruptcies are a part of the Free Market, and are in place for situation just like this. [/rant]

Stay Fresh.