Wednesday, April 15, 2009

Brace For Hyper-Inflation

Voltron says: one correction to the article . . . the Fed is not buying the toxic assets - they are accepting them as collateral for loans. The banks will get this crap back someday, and it's not going to smell any better than it does now. The problem is the Fed is treating this as a liquidity problem, when it's an insolvency problem. The banks need cash and all they have is crap so the Fed acts as the pawn shop of last resort. The Fed cannot solve insolvency problems. The U.S. Treasury must go into debt to recapitalize the banks. They are doing this via AIG and the F.D.I.C. to get around Congress.

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