Pay No Attention to that Money Behind the Curtain

While everyone was focusing on the AIG brouhaha yesterday, a far more serious thing was happening. The US treasury decided to put $1 trillion in to the system by buying up its own bad debt.

This is the same as writing an IOU to yourself. They are taking a trillion dollars from one pocket, and putting it into another pocket. Nothing gets accomplished, and there is still money owed to people.

But no one heard about this, because everyone: congress, the media, the president, were focused on AIG paying :gasp: contractually obligated bonuses to its employees! Bonuses that were perfectly legal because they were promised before the February 1st deadline passed by congress!

Imagine that, a company holding up its end of the deal and fulfilling its contracts! Oh my! Sound the alarm! We need to tax these bonuses at 100% and get this money back! How dare they use the money we gave them to fulfill their contractual obligations!

What else? Oh, Fannie Mae and Freddy Mac ALSO used bailout money to pay contractually obligated bonuses to their employees. Why are people not running after them with torches and pitchforks?

Really, it's all the fed can do at this point. Interest rates range between 0 and .25%, so they can't really go any lower. The US Treasury Department currently consists only of the completely incompetent Tim Geithner as Treasury Secretary, and President Obama apparently has much more important things to attend to: like appearing on The Tonight Show with Jay Leno.

This country is falling apart at the seems. At the G20 conference, a meeting of the top 20 industrialized nations, former Russian Prime Minister Vladamir Putin will propose changing the world bank reserve currency from the US dollar to something else. The dollar has lost all it's clout in the world. Gold rose $50 an ounce yesterday upon news of the Treasury's plan.

The rest of the world wants no part of the US dollar, because they've read a middle school history book and remember the pictures of people bringing wheelbarrows full of money to buy a loaf of bread in Germany Post-World War I. Obviously Secretary Geithner and President Obama never read that chapter. And we are all going to pay for that in the end.