So we are spending HOW much now?

Well, the initial bailout for Bear-Stearns was $29 billion, Fannie and Freddie got $200 billion (initially, with freedom for the Fed to give as much as they wanted to), AIG got $85 billion, $168 billion additonally for stimulus, and now $700 billion dollars (plus who knows how much more)... so that is something like $1.3 trillion dollars for "stimulus" and "bail-outs". The ENTIRE federal budget this year was $2.9 trillion to start with... and the ENTIRE reciept from income taxes was $1.25 trillion. That means already this year we have spent more money trying to "fix" the economy in the short term than we have taken in from the top source of income to the federal government.

But what is causing this whole problem in the first place? Why are all these businesses failing? Well, most of them are banks. You would think banks would be plenty safe considering all of their regulation and income, right? Well, not really. People who are getting loans now are misrepresenting their income, even being ENCOURAGED to overstate their income to get bigger and better houses than they can afford, and in the end can't make their payments on their Escalades and 3000 sq ft houses on their meager incomes. Basically what happened is that 10 years ago, people complained that the poor people couldn't qualify for loans based on their bad credit and no income. So a law that was passed back in the day got repealed so that anyone could get a loan, the "sub-prime" thing everyone is talking about, and now we are seeiong the effects of it. Companies when they have to forclose on a property have to auction off that property... and knowing people that work in the forclosure sector, let me tell you that they ALWAYS lose money when they have to forclose. Banks hate forclosing, but it's just what has to be done. But that isn't even the real problem. At least there, money is backed by a property. The big issue is when the loans get overlent. It used to be that banks had to have money in the bank as a percentage of what they lent out. For every 10 dollars they lent, they had to have a dollar in the bank. This was the issue back during the depression when the banks had rushes on them and they didn't have anything on hand to deal with it. Banks went under because all of their loans failed and they didn't have ANY money to back it up. Of course now banks often loan 60 dollars to every dollar that they have on hand because it is just created out of thin air in a computer, or the loans are actually given from someone other than them. When you go get a car loan, often the loan is actually through someone else. Lots of banks are paid to give out loans and have to meet certain quotas, but those loans aren't even done through their banks, they are FHA loans or done through Fannie Mae and Freddie Mac even today... and there just isn't enough demand for them. A caller in to Rush Limbaugh the other day said this and said it isn't that there isn't money, because they have tons they need to loan (unlimited, because they create it out of thin air) but people just aren't getting loans. And now with the "crisis" the congress has actually cleared away ANY requirements to have cash on hand, and banks can basically create loans in an unlimited number without having anything at all to back it up. It's just created numbers in a computer system that gets transferred between banks. From 10% to 0%... and when you realize what this actually does (Indie Mac anyone?) it is a very scary thing.

At last count, there is only $900 billion dollars in actual physical US currency in circulation... and we owe 10 times that much. How much more do we have to print before people around the world realize that it is backed by nothing and it becomes completely worthless?