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Fed Audit's Initial Report Reveals Trillions in Secret Loans
An anonymous reader writes "The first top-to-bottom audit of the Federal Reserve uncovered eye-popping new details about how the U.S. provided a whopping $16 trillion in secret loans to bail out American and foreign banks and businesses during the worst economic crisis since the Great Depression."
nuff said.
"Among the investigation's key findings is that the Fed unilaterally provided trillions of dollars in financial assistance to foreign banks and corporations from South Korea to Scotland, according to the GAO report. "No agency of the United States government should be allowed to bailout a foreign bank or corporation without the direct approval of Congress and the president," Sanders said."
So the quote says no agency *should* be able to do this, but I thought it was actually illegal. Is this not the case since the Federal Reserve is actually a private entity?
Holy fuck. I'm not voting for anybody of my federal representatives that are currently in office in the next election. Fuck'em all. Only a select few in congress have earned my trust. The rest need to go.
I wish I had a surprise face for this, but things like this just don't seem to surprise me anymore.
They're almost expected?
I don't see how the federal reserve could have given out 16 trillion in secret loans when that represents more than five times the total assets of the federal reserve... Am I missing something? The GAO's report never mentions this figure.
But I am unsure how the the powers of the Executive Branch can force a change.
1. He only gets to sign or veto bills written by other people.
2. He has no control over the airwaves that would be saturated by very desperate people who want to keep things the same.
3. He will want to get re-elected.
Now let's put these criminals who've stolen trillions from the American people behind bars.
Oh wait.
"If a nation expects to be ignorant and free in a state of civilization, it expects what never was and never will be."
Its not some sort of secret, it has been disclosed by the Fed in their annual reports as required by law.
http://finance.fortune.cnn.com/2011/07/08/surprise-the-big-bad-bailout-is-paying-off/ Fortune Magazine Article
There will be no uprise, there will be no pause
There will be no protest or justice call
Seriously, this level of corruption in the government should hold serious consequences (meaning federal imprisonment) but the most that will happen is that the perpetrators will get a slap on the wrist and this issues will get swept under the rug.
This is all very interesting, but doesn't look like much new. Hopefully next time around, you'll get a leader who will arrange some laws for your financial markets, not just say that he will. And after that, we hope that the other side does not vote it down. Though I'm not sure if Obama's regulation efforts needed any shooting down by republicans.
OK, so they loaned out a truly epic amount of money. A reasonable thing to do during a crisis: you borrow money to get through the bad times, then you pay it back when times are better.
The questions are:
* Did they pay it back?
* Did they pay interest?
* How much?
I don't really care about the absolute dollar figure: this was an international crisis and the dollar figures are going to be proportional to the size of economies, which will measure in the trillions. As long as the net result was that the economy survived (which it did), that it didn't blow up inflation rates (which it didn't; inflation was negative for a while), and that in the end the books balance (thus my questions).
It may well be that the interest rates were so low as to be questionable, especially given that the banks have been giving nonexistent interest to depositors and have been very chary about turning that money around to investment. But I'm not going to wring my hands over the size of it. I'm more concerned about the terms.
I Betcha' that's just the tip of the iceberg.
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In Soviet Russia secret loans audit you, top-to-bottom.
I thought this site explains what a trillion dollars is fairly well.
www.wtfnoway.com
But Ron Paul does not advocate return to pure gold standard, he advocates allowing competing currencies, some backed by gold, other by silver, third by "trust in US Government", and letting people/markets decide which one do they prefer.
And, as others have said, US was technically on the gold standard until 70s, this is how dollar became reserve currency of the world...
Paul B.
The Fed and the Treasury keep swearing that they're not going to monetize the debt. But my goodness, this amount of money is greater than what we owe. For that matter, it's greater than our GDP. This is why we should all laugh when they say they won't be monetizing the debt, try to prepare for heavy inflation, and vote for someone who has a record of not being a mere R or D. The Fed supplied status quo, built on endless wars and unsustainable entitlement programs, will end because it will destroy our currency.
A) These are loans, almost all of which get paid back.
B) this is not a secret. Just because something goes on you didn't know about, doesn't mean it was a secret. It just means you where ignorant.
C) This benefits the US. The US MADE money from this.
I just had to get that out there, I know it wont stop the frothing lunatics.
The Kruger Dunning explains most post on
"No agency of the United States government should be allowed to bailout a foreign bank or corporation without the direct approval of Congress and the president," Sanders said.
Since when is the Federal Reserve an agency of the United States government? Last time that I checked it was and still is a privately owned corporation.
Just be sure to wear the gold uniform when you beam down -- you know what happens when you wear the red one.
But Ron Paul does not advocate return to pure gold standard, he advocates allowing competing currencies, some backed by gold, other by silver, third by "trust in US Government", and letting people/markets decide which one do they prefer.
Because multiple competing currencies worked so great during the Articles of Confederation days, right? Oh wait, it was an abysmal failure.
No one from any banks or investment firms should be allowed to serve on any government boards. The corruption is absolutely absurd, they have the interests of the companies they are boards on not of the people. Like what this country was founded on a government of the people, by the people and for the people. But this country has become ruled by the corporations and it just saddening.
Just because you are wrong and I called you out on it doesn't mean I am a Troll.
Lets say I have 5 dollars.
I lend you 5 dollars, the next day you pay me back 5 dollars and 5 cents.
The I lend that 5 dollars to someone else and they paid me backs 5 dollars an 5 cents.
I lent out 10 dollars during those 2 days, but I never lent more then I had. And I ended with 10 cent more then I started.
Get it?
Listening to most slashdotters talk about finance is like listening to accounts talk about a computer. simple painful.
The Kruger Dunning explains most post on
Secret bailouts are not new, http://en.wikipedia.org/wiki/Long-Term_Capital_Management
On the face of it, it appeared that private banks provided the bailout money, but many suspected that they were all backed by secret government loans.
Wonder if the MSM will retract all those statements it's made about people wanting to "end the fed" being crazy?
"I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs." -Thomas Jefferson It doesn't get anymore prophetic than that.
[Citation needed]
Good point.
Effectively, the problem is that given inflation, inventories earn more than they cost, so there is profit. In deflation, inventories cost more than they earn, so there is loss. *technically* that isn't exactly true--the value of the dollar is changing--but it certainly messes a lot of things up, like our whole national tax infrastructure.
Deflation also makes it more expensive to borrow... unless you adjust for the time value of money in the borrowing, which frankly is more complex and probably more expensive (transaction costs are higher for more complexity).
-- IANAL, this isn't legal advice, and definitely isn't legal advice for you. Also, Squee!
We have 10% of the world's official gold reserve sitting in a basement in NY, 50 feet below sea level. It's just sitting there. (NY Fed.)
-- IANAL, this isn't legal advice, and definitely isn't legal advice for you. Also, Squee!
seriously guys, this isn't news.
One of our competitors trademarked the term "hypothesis". From now on, we will call them "boneheaded ideas".
Got news for you, before WWII, our solders pointed broomsticks at cars ("tanks") and said, "eh, eh, eh, eh, eh, eh", to simulate firing an imaginary weapon. During WWI, gunners trained by using their finger and pointing at imaginary targets while spinning in a swivel chair. The US absolutely did NOT become a super power until after the close of WWII. And in large part, that was thanks to the Germans (including Nazis) absorbed by the US.
At the Battle of Leyte Gulf, we had forty aircraft carriers: 8 fleet, 8 light, and 18 escort. Plus a dozen battleships and over a hundred fifty other ships.
Forty fucking aircraft carriers.
We were a super power--and the only nuclear power--before the end of World War 2.
-- IANAL, this isn't legal advice, and definitely isn't legal advice for you. Also, Squee!
That's from before Obama had a chance to do anything. It's gone up almost 30% since then.
1: Stop with all the NEW pork projects in the government and military.
2: Finish out any projects already on the books that are within their original budgets.
3: Do not continue to pay for projects that are overdue.
4: If projects are overdue, DEMAND DELIVERY.
5: If the contractor cannot deliver, declare the project failed and in default.
6: Liquidate the company's assets to recoup the cost of the failed project.
7: Stop all the government welfare crap. If there's legitimate medical reason, maybe. I'm a big fan of government-created work programs though. Nothing like a lot of back-breaking labor to motivate someone to get a real job. Tie it into health and housing support with a small budget for food, etc.
8: When an official is elected to office, liquidate all his assets and put them into a fund tied to the well-being of the economy. This way, if the economy does well, he has a lot of money when he leaves office. If the economy tanks, he's handed a set of clothes and turned out on the street when things are over. Tax rates would be fixed during their term and only take effect once their successor took office. This way they can't fix tax rates to generate false profit.
I could go on, but you get the idea.
Of course, this would never work. Politicians of all stripes would never actually DO this. The lousy fucking bastards are all more worried about keeping their jobs and lining their pockets than they are about actually doing something to help the country.
Maybe they should wor
Chas - The one, the only.
THANK GOD!!!
No mod points for me today, or you would have gotten a +1 Informative.
Where, exactly, does this $16 trillion figure that Sanders cites appear in this document? That's about twice the current M2 money supply figure for the entire economy. The Executive Summary of the report cites a $1 trillion figure for the total of loans disbursed at the peak in 2008. As Figure 11 on the Report's page 137 shows, most of those loans have been fully paid back.
So thanks the power of Ctrl-F, I searched for every "16" in the document. The number Sanders is citing appears on page 131, which does report a figure slightly over $16 trillion. However if you look carefully at these numbers, the big items are all from the "PDCF" facility, which provided collateralized overnight loans to big banks. As the Report notes, it's unfair to compare an overnight loan to one that has a much longer term. When the GAO adjusts these figures by length of term, the adjusted figure is more like $1.1 trillion.
Per the Wikipedia entry, normal audits of the Fed leave significant gaps, gaps that were to some degree addressed by this more through audit.
Luke, help me take this mask off
I don't see how the federal reserve could have given out 16 trillion in secret loans when that represents more than five times the total assets of the federal reserve... Am I missing something?
Yes you are. Investment banks live(d) on short term loans, often literally overnight. They might borrow $2 billion today and repay it tomorrow. Sometimes this money gets borrowed from other banks (commercial paper) or sometimes it is borrowed from the Federal Reserve. This is perfectly normal and nothing to normally get overly exited about. The only thing to get excited about is when it doesn't happen because that means there are liquidity problems. The thing that killed Lehman Brothers was precisely that no one would loan them any money - they basically ran out of liquidity.
The $16 trillion figure is VERY misleading because it isn't one loan or even a few loans. It's a series of very short term loans done repeatedly. Big dollar amounts but we're talking millions to a several billion at any given time spread across many borrowers. This is EXACTLY what the purpose of the Fed is, to be the lender of last resort - to loan money when no one else can/will.
$16 Trillion sounds like a lot (and it is) but the average daily trading volume in bonds is about $800 billion. During the financial crisis almost the only one lending was the government. Doesn't take long to get to $16 trillion in a market where the total market for debt outstanding at any given time is about $90 trillion. The bond market is 2-3X the size of the stock market.
Now if only they could find that 12 Billion that went missing in Iraq. Yeah, whatever happened to *that* ?
If telephones are outlawed, then only outlaws will have telephones.
Things have changed a -bit- since then. I've heard one of the major problems was that interstate commerce was crippled by the conversion. Today, I can use my credit card in nearly any other country, if my debit card was paying out in florida dollars instead of montanas or whatever, I'd have to keep an eye on it, but it wouldn't be the huge hassle it was back then. I wouldn't have to take a horse and ride to the nearest town to change my currency.
Which is not to say it wouldn't be a disaster for -different- reasons. At a minimum, I'm sure banks would love it if you couldn't use cash and they got to put a surcharge for converting between competing currencies. Plus I'm not a member of the "Free market forces improve EVERYTHING" religion.
Since when is the Federal Reserve an agency of the United States government?
I would guess ever since the Federal Reserve System was created by an act of Congress, which has been amended some 200 times. All banks are required to be members of the Federal Reserve.
Last time that I checked it was and still is a privately owned corporation.
It is technically private but that doesn't mean it doesn't answer to the government. The Fed needs some independence to do its job properly. But the Fed is a quasi-governmental entity. It is backed up by the full faith and credit of the US government and only exists because Congress delegated some powers to it. It is private in the same sense that Fannie Mae was private. Technically true but well understood that it had the backing of the government.
"Last time that I checked it was and still is a privately owned corporation." ... and this is supposed to make me feel better?? what the hell is the a privately owned corporation doing with an unregulated unrestricted uncontrolled license to print money, when the consequences and amounts are both so insanely high? i could understand... if there was actually anything IN THE RESERVE ... like... y'know.... gold? or something? y'know? i think you REALLY need to read Senator Ron Paul's book, "End the Fed".
is indeed to do just this - act as a source/sink to the financial system to filter out spikes (http://en.wikipedia.org/wiki/Federal_Reserve_System).
Ron Paul needs to look at history. There is a reason we don't do that anymore.
And if you can't bother to find out why on your own, then you shouldn't be allowed to vote.
The Kruger Dunning explains most post on
Yep, banks would get together, and then refuse to take some currency, making it worthless. And then buy up property from people who defaulted because there money was suddenly deemed worthless.
The Kruger Dunning explains most post on
You're correct, the US "made" money on these loans... because the Fed, with an accounting trick within its authority, in essence created trillions from thin air. The Fed created value - money - when buying what anyone else considered worthless.
During its open market operations, the Fed expands or shrinks the money supply (a superset of physical currency) by buying or selling bonds or other financial instruments. The "loans" discussed here were created when the Fed "bought" bonds and short term paper from the private institutions. Where did the Fed get the money to pay for them? The stacks of Treasury notes, whose value is ultimately backed by the "full faith and credit of the United States", ie. the ability of the Federal government to tax and print money. (Side note: the GOP is currently destroying trillions of dollars worth of goodwill. Can we expect a check from the RNC to repay it?)
Theoretically, this crap was backed by collateral. But, the edifice of fractional banking ultimately rests on a little bit of physical collateral, and a lot of trust. Since trust had by this time evaporated, the Fed was in effect passing out free money. While it's true that any surplus from Fed operations go the the US Treasury, the profits were a drop in the bucket against the trillions in value that drained out of the US economy.
Luke, help me take this mask off
modded above 3 thinks this is outrageous. The USA is done.
If they line up the CEOs of Goldman Sachs, AIG, JP Morgan and all the rest of the usual suspects and summarily executed them, and then repossessed all their yachts and limos and burned their mansions to the ground, then personally I'd feel quite a bit better about $16 trillion of our fucking money being handed over to these creeps.
And spare me the "it's just a loan" crap. "Just a loan" that never gets paid back.
Do what you can, with what you have, where you are.
Just goes to show that non-bankers use the wrong units to measure how much money was lent.
Hey don't blame me, IANAB
You're mixing up Ron Paul supporters with Rush Limbaugh / Fox Noise supporters. Please don't. Free Markets and Republican political capitalism are much different things, and free marketers don't think ignorant insulting sloganeering is a good way to convince people to agree with you.
Yes, we know Bernie, and people who like Ron Paul have generally paid enough attention to like Bernie Sanders even though we disagree with him on a lot of issues. He's a Socialist who's actually in favor of Socialism, using government resources to do good things for people, as opposed to somebody who likes big powerful intrusive government because they like power and can use their power to support their friends (we call most of those people "Republicans" and some of them "Democrats".) Sure, it's not economically sustainable, but the system we've got now tries to emulate many of the bad aspects of socialism and not the good ones.
If you've noticed, and you apparently haven't, Ron Paul disagrees with most of Congress a lot, but when there are a couple of other people agreeing with him on something, it's usually Bernie or Dennis Kucinich. Occasionally it'll be a Tea Party Republican, but only if it's a fairly specific economic issue, and usually those guys would rather vote with the Party Machine or bully the Party Machine into doing what they want.
Bill Stewart
New Fast-Compression-only CPR http://preview.tinyurl.com/dy575ks
But I guess it isn't so :-(
This isn't really news. These weren't even real loans, they were just 28-day backstops during the money market meltdown. Just like the inflated values reporters loved to throw around about CDSs, it's more of the same here. They're just adding them all together sequentially (and conveniently forgetting to report the short durations and senior debt status).
And, really, only a complete fool hopes and prays for the banking system to fail.
Go looking somewhere else, this was one thing the Fed actually did right. And like TARP, the government didn't lose any money doing it either.
If you want to complain about something complain about the use of the AIG bailout as an indirect method of bailing out the (mostly bank) counterparties. That was real money that didn't have to be paid back to the government.
-Matt
Bernard Sanders is not the only self-described democratic socialist in the Congress; there are at least 69 others (since, including Sanders, there are 70 members of the Democratic Socialists of America in Congress, but there may be additional self-described "democratic socialists" who are not members of the DSA.)
Expanding the money supply isn't necessary for economic growth - what happens instead is that as the economy grows, prices of everything fall, which is a reasonable response to having more stuff around for people to buy. This is mostly good. It means that you can save money and it'll be worth more to you in the future. On the other hand, it means that if you borrow money, it's effectively going to cost you more to pay it back, which is a problem if you want to take financial risks (like starting/expanding a business), and you might be more inclined to rent a house from a landlord than to borrow money to buy one yourself.
Also, "expanding the money supply" means that the government effectively prints paper money and says "you have to accept this as payment on stuff", without them having done actual work to create more stuff in the economy. Why should they be allowed to do that? How do you keep them from doing it to excess, e.g. Weimar Germany where you needed wheelbarrows full of currency to buy bread, or Zimbabwe which has dropped at least 30 zeroes off their currency, leaving what a friend of mine called "homeopathic quantities of money"?
Bill Stewart
New Fast-Compression-only CPR http://preview.tinyurl.com/dy575ks
On the other hand, just because I don't think expanding the money supply is a good idea, that doesn't mean it hasn't already happened to such an extent that we can actually get the US back onto the gold standard, given the amount of economic activity, the amount of gold in the world, the amount of real money, and the amount of fictitious funny money floating around in the financial markets, much less the huge interconnectedness of the world economy that's evolved since we went off the gold standard (which didn't happen because we went off the gold standard, but because protectionist regulation was reduced or eliminated, transportation costs dropped significantly, and lots of economic activity happened.)
Gold is a commodity, and it has functional as well as speculative value, gold ownership is spread very unevenly around the economy between commodity users, speculators, and jewelry, and I'd be extremely surprised if the government could pick a gold price and suddenly declare "We're backing US dollars with gold at $X/oz and we'll buy whatever we need with the existing dollars to make that work" without radically twisting the market in ways that don't make economic sense.
Ron Paul, with all due respect, hasn't really been paying much attention to the changes in the world economy over the last couple of decades. Yes, we could possibly have gone back to the gold standard in the early 1980s (after the Hunt Bros attempt to corner the markets during the ~1980 gold price bubble was over with.) But that was three decades ago, and you can't get back there again.
Bill Stewart
New Fast-Compression-only CPR http://preview.tinyurl.com/dy575ks
http://www.wtfnoway.com/
Never try to beat a professional at his own game!
And, as others have said, US was technically on the gold standard until 70s, this is how dollar became reserve currency of the world...
Engineering the US dollar as the only accepted currency for OPEC oil purchases probably had a bit more to do with it of late.
That's one reason the US government has been so down on Hugo Chavez -- he threatened to accept the euro in payment for Venezuelan oil, which would have seriously imperiled the valuation of the US dollar.
Cheers,
"What in the name of Fats Waller is that?"
"A four-foot prune."
Also, the Debt Ceiling compromise is going to be a mess, and one obvious thing Obama can do besides raising taxes and cutting spending is to sell assets - he's been drawing down on the Strategic Oil Reserve already, mostly to manipulate gasoline prices, but he could always go sell all the gold in Ft. Knox just to annoy Ron Paul :-)
Bill Stewart
New Fast-Compression-only CPR http://preview.tinyurl.com/dy575ks
Are they "secret" loans, or is it just that the details are private?
-fb Everything not expressly forbidden is now mandatory.
$16 trillion?! More than our GDP in loans, SOME OF WHICH WENT TO FOREIGN BANKS AND CORPORATIONS?! When did our representatives put foreign countries above the welfare of the average American, all the while using American tax dollars as average Americans lost trillions in wealth (phantom, yes) and unemployment skyrocketed. Wait, it wasn't voted on by Congress- how convenient. Does anyone not believe that the average American is playing in a rigged system now? Fire Washington, burn the lobbyists out of town and tax Wall Street to its neck. If this doesn't show you who our government represents then you're one of them. THIS is the straw that breaks the camel's back, if we can't trust our government to support its own citizens in the crisis AT THE EXPENSE OF Americans then this game is over.
as others have said, US was technically on the gold standard until 70s, this is how dollar became reserve currency of the world...
Paul B.
No we became the currency of the world after WWII because we bombed the crap out of the rest of the world. We took most other countries gold, and had them use the US dollar as their reserve currency since ours was still backed by gold and redeemable (by foreign governments) for gold.
Time to offend someone
There were two major oil crises in the US in the 1970s. The first was before the official abandonment of the peg of the dollar to gold, when in an effort to reduce the trade deficit in order to preserve the peg Nixon imposed limits on oil imports (an effort which failed, which caused the complete abandonment of the already-merely-notional peg of the dollar to gold, and more significantly the peg of many other world currencies to the dollar), the second was when the Arab states raised prices globally and boycotted sales to Israel, the US, and certain close allies of those countries. So, your argument is wrong in, essentially, every point.
US debt isn't a Walmart warehouse stacked 4-6 high. Try 20 layers high to the ceiling.
http://www.pagetutor.com/trillion/usdebt.html
I think it's safer to live out at Sea, rather than risk living in any country or nation because each and every one of them becomes fiscally irresponsible wherever the jews are allowed to control the nature of money.
I'm not sure why this is news (google "short term loans federal bailout" for stuff back in march/april). The Fed Reserve admitted to as much months back, though it had to be coerced out of them. The loans (overseas and domestic) were done in an overnight or sub-week fashion in order to provide liquidity in the open market. Where I draw issue is that most of these banks had capital, but were unwilling to lend it. Instead, they were able to get essentially free (~0% interest) money with which they could purchase short-term positions with guaranteed returns (e.g., US Treasuries) and make considerable money. Almost *none* of this money was lent to small businesses (as that would've required a long-term loan from the Fed, which this was not).
During that interval I really wished I would've qualified as a bank so I could (1) get huge sums of zero-interest short term money from the Fed and (2) just stash it somewhere to get returns in gov't bills.
Also, the metric reported (16 trillion) is a bit skewed. If you imagine that this was done over 14 months and the loans were of a 2.5 day average, that means any given day only 95 billion dollars was actually wrapped up in loans ( e.g., the RMS loan value is $9.5e10= $16e12/(14 months*30days/month)*2.5days). However, taking that back-of-the-envelope number and calculating interest, that let (with 3% compound interest at 14 months), the collective of banks make ~3.6 billion in returns. So, given the loss to the community (e.g., free money of 3.6 billion to rich banks), versus the potential fallout if they hadn't made these loans (e.g., bank collapse??), I say that this was a *very* cost effective means of stabilizing the economy. This is in contrast to other "bailouts" and shovel-ready plans which essentially just funneled cash into poorly managed state slush funds and pet projects.
No, I'm not. Words and phrases have meaning, and "self-described democratic socialist" is a phrase that applies to more than one person in the US Congress.
If I had been referring to the Democratic party, then I wouldn't have said 70, I would have said 244 -- there are more than 70 Democrats in Congress. But the issue isn't how you define "democratic socialist", its how people describe themselves (Bernie Sanders was described, in GGP, falsely as the only SELF-DESCRIBED democratic socialist in Congress.) The Democratic Socialists of America are a group whose membership includes many Democrats (and many people who aren't Democrats, of whom Bernard Sanders is the only one in Congress), and which identifies itself as the nation's largest socialist organization. I may have overstated the number in Congress, as the count of 70 was current as of the 111th Congress, but, still, Bernard Sanders is far from the only self-described democratic socialist in Congress.
Ask 10 Economists about anything, and you will get 10 different answers. I don't see how that is based on math and science. Yes they have models and such, however there is a divide between the theroy, the models, and reality, which is what I think they get at.
Case in point, if economics is based on sound science and math, why did no one really predict what happened?
If an ideal world, I agree that economics can be modeled, and be meaningful. However we live in reality which is much dirtier, and not so precise. Anyway I don't reject the idea of economics and the use of math and science to try and explain things, but at best it is alike a pseudoscience like psychology or sociology.
The take highly complex problems, with many important factors not included, and simplify it to the point where it makes sense in a model, but not in the real world. They can still be useful, but only in a limited way.
The classic physics joke "First assume a spherical cow..." comes to mind.
How was it an abysmal failure? There were problems with interstate commerce but the Articles of Confederation was the government that defeated the British.
Because multiple competing currencies worked so great during the Articles of Confederation days, right? Oh wait, it was an abysmal failure.
That was because those currencies were backed by banks and/or states, not the federal government, no? Not to mention that type of system would look vastly different in the digital age -- how easy is it to convert the pound-sterling or the euro to the us dollar these days?
Folks,
If you will kindly open your copy of "The Restaurant at the end of the Universe" by Douglas Adams, chapter 32 does an excellent job of explaining the predicament that we are in.
Personally, I have stuffed my track suit with leaves and Zimbabwe $100,000,000,000 dollar bills to avert recession.
$16 trillion is more than the roughly $14 trillion in the US's GDP in 2009. This shows the depth of the financial crisis and I'm frankly astonished that it isn't closer to $40 trillion which is about how much the housing bubble reduced Americas wealth by.
My debt is roughly equal to one years worth of income so where's my bailout?