But what about the immediate problem of the monetary system that nearly froze last week, and remains at risk of such?
“Long term, yes, deflate assets, or inflate money.”
Their stinking baikout will probably do both.
If they print the money, the minute it hits the banks it becomes 7 trillion at a minimum which will bring on wholesale inflatiom.
If they sell the property they bought for what they paid for it we still actually take a 50% loss because if the depreciated dollar rhat they sold it for.
I guess it’s time to turn money into hard assets that will follow the value of the dollar in purchasing power.
The monetary system is frozen because if someone thinks a potential creditor might end up repaying only pennies on the dollar for its debt, the person isn't going to want to risk having his money pooled with all the other pennies-on-the-dollar debt. If the government were to, as expeditiously as possible, announce that much of the bad debt was simply written off (tough luck to the existing creditors) then new creditors would be able to invest with much more confidence.
From what I understand, the situation is somewhat like personal bankruptcy. Someone who has just declared bankruptcy will hardly be regarded as a good credit risk, but will have a much easier time getting honest credit than someone who is clearly imminently facing bankruptcy.
Pop the bubble and the markets will recover.