To lend/create/print more money to solve the current crisis only postpones the inevitable.
None of this money is backed by gold, so it only benefits those who get their hands on it first. After that, it simply dilutes the value of the money already in circulation.
Politicians would rather print money then deal with the problem. It is always a quick fix, but make the problem worse.
As a certain congressman asked Bernanke recently 'How do you solve inflation by creating more inflation?'
This has been going on since we created the Central Bank here in the US, then got worse when gold was no longer legal to own by individuals, then completely broke wide open when Nixon got off the gold standard entirely.
Example: 10 people have $10.00 each ($100.00 total). One person is a frugal hard worker and puts $5.00 in the bank and builds a shop to create widgets with the other $5.00. The other 9 persons end up spending their money and borrowing more to the point where they can't pay their debts. The Politicians say 'don't worry' and put another $100.00 into the bank for people to borrow cheaply as needed.
Now the frugal fellow's savings in now worth 1/2 what it was, since that original $5.00 out of $100.00 is now $5.00 out of $200.00. The obvious conclusion? It doesn't pay to save. It is better to borrow and pay back with cheaper dollars in the future.
The one beneficiary from this continuing 'solution' is Gold and commodities. That's why I'm in NOT. No matter how much $$$$$ the gov't pumps into the system, 'things' will retain their value. This is why we hear cries of 'INFLATION!'. It is not that things are getting more expensive, it is that money is being printed and so devalued and worth much less.
The gov't though will blame 'big corporations' and 'middle east' for inflation. They won't bother to explain that yes, oil is much more expensive now (just like house prices doubled), but that the real culpri is the devalued dollar. Silver has doubled, Gold has double, Oil has doubled. It is not the greedy oil producers it is the cheap dollar, and euro, and yen and all the other fiat money (paper backed by nothing) that is continually being printed.
In summation, an announcement that they are going to print more dollars is NOT good news.
BK
