U.S. Senate Passes Bill and Defeats the Constitution

Stick a fork in it … we’re done. Today’s passage of the Senate’s version of the mother of all bailouts bill all but seals the fate of the great experiment known as America. The first nail is in the coffin, the second is soon to follow.

Here’s how it works, for those too short on brains to figure it out.

Plan A: Pass the bailout. Financial institutions get to offload their illiquid assets onto Uncle Sam (read:taxpayers) and start all over with a clean slate. This allows them to continue the bad loan practices and jack-of-all-interest rate deals they have done for decades now. In response, the Fed will continue to print money out of thin air and loan it to the banks at rates that simply boggle the mind. Did you know the Fed loaned out more money in the two days before this vote than they had assets on the books? Good luck figuring that one out!

So what’s the bottom line with Plan A? As the monetary supply reaches epic proportions, hyperinflation will take place, causing foreign banks and governments to do two things: (a) stop loaning us money to keep us afloat, and (b) cashing in their dollars, which will cause the value of the dollar to freefall into the abyss. Instead of a recession or depression, what we will get is nothing short of the collapse of the American dollar and everything that runs on the dollar (read:government, both state and local).

Plan B: Forget the bailout. Hang tight and let the market correction take place. I’m sorry to inform you, but that 2,500 square foot house is simply NOT worth $1.5 million. Deal with it. Yes, times will be tough and there will most likely be a depression. This is when we should fire the Federal Reserve and take back the gold standard to back up our money so it has some real, intrinsic value. After prices stabilize and the amount of dollars in circulation is reduced back to the level we can back with the value of gold, then we can move on and begin to rebuild our economy on something of substance instead of thin air.

OK, I’ll leave you with this video from Ron Paul explaining his concerns. Maybe I didn’t explain it well enough and you can understand his version.

So long, and thanks for all the fish.

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Tags: austrian economics, bailout plan, collapse of the dollar, ron paul, senate bail out, senate bail out plan