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Politics : President Barack Obama -- Ignore unavailable to you. Want to Upgrade?

To: Sr K who wrote (120223)	9/12/2012 4:47:12 PM
From: RetiredNow	Respond to of 149317

No, Sr K. That's false. The gov't bought most of the toxic debt at full face value, because the free markets were unwilling to buy it. If they had, then no gov't bailout would have been necessary and those banks would have gone to bankruptcy (which is what should have been done). So the gov't lost a ton of money on those bailout deals when they printed money to buy toxic debt at face value. The profit they are claiming is more than likely coming from the collection of dividends from that debt. Here's another thing. The Fed buys US Treasuries that fail to sell in open market operations. In other words, the free market doesn't want US debt anymore. So the Fed is the buyer of last resort....and the Fed collects interest payments on those US Treasury holdings. After it deducts salaries and other expenses, it then reports the residual as a Fed "profit". Is that really a net gain to the US taxpayer? No. The US taxpayer is spending more than we earn, thanks to Congress. We finance that spending with debt we own to foreigners and to ourselves. We then pay interest to foreigners and to ourselves. The portion that we pay to ourselves is paid with increased borrowings. To the extend the Fed buys those debt instruments, they print money to do it. Yes, this is monetization of the debt and represents a decrease in your purchasing power as our currency is devalued against other assets. This is a shell game, pure and simple and I don't blame most Americans for thinking they are getting a good deal from the Fed. They have been masters at selling a fairy tale to the American people that money printing and other QE games are a path to prosperity. They are pulling money from the left pocket of the American people and then putting less of it back in the taxpayer's right pocket and claiming that is profit. It is nothing of the kind.