Hello All,
I need a little help. I have a question that has me stumped, so I’d love some feedback. Here’s the question: Who cares if Lehman Brothers goes belly-up? Who does this really effect? I can understand the rare individual who placed his/her whole retirement plan in their stock. I get that. But generally people invest in mutual funds, stupid as that may be, and while this may hurt the mutual fund, it doesn’t wipe it out. So it kind of sucks, but doesn’t ruin anybody.
Then I hear it effects inflation. Does it? The government didn’t bail them out. The government did not print more money to fix the problem. Where’s the inflation? From unemployment? Then we should bitch about the automobile industry more. They shut down plants all the time. Or we should complain about the companies that ship jobs overseas.
The government didn’t raise taxes to bail them out. That argument is a joke anyways. We don’t raise taxes, we just print more money.
So I don’t get it. Help me out here. Is there anyone out there who is truly effected by this? More than the rise in gas prices?
Jack B. Confused
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4 comments:
The way I understand it is that the fed reserve loans the government (bailout) money, newly printed fiat currency, and our taxes get raised to cover the interest of the loan. Your taxes will go up to cover the interest of the new money that wasn't available to begin with and the greed of the CEO's of these companies. Yes, we would go to jail for writing a bad check like the fed reserve does.
Okay, but why do taxes go up? All we did was print more money. Why does that affect my taxes?
Wow..it seems weird that someone working at Richdad would ask this question...But I admire you zeal for learning...When more money is created , the supply goes up...when the supply of something goes up the value goes down...so an increase in printing of currency makes it worth less, therefore increasing you taxes. The government will get the money for the bail out from either the FED or foreign countries...either way it borrows the money...and increases property taxes as a way of paying for the money which is borrowed. More money = less dollar value = more taxes.
Printing currency is fiat money. This is money with no intrinsic value. Ultimately this could lead to hyper-inflation where the currency is near worthless.
Zimbabwae did this and they have real issues. This also happened during the 1930s with the Weimar republic. That is why Robert says savers are losers, because the rules of money have changed.
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