As I am sure you have heard that recently AIG Executives received over 165 million dollars in retension bonuses. Congress has been in a rage about this some telling the execs they needed to commit suicide. I understand the outrage over them receiving bonuses with the tax payer dollars. I have a lot I'd like say on this but there is something else I think you need to know about what happened behind the scenes while all this was forefront on everyones mind.
In the infinite wisdom of our new administration the United States Treasury decided to borrow 1 Trillion dollars from ourselves to pay our debts. The first question on most peoples mind is how can we borrow money from ourselves? easy we just print it!!!! So while everyone was distracted by the AIG debacle our treasury was printing tons of money... One of the biggest questions people ask is what does it matter if we just print money? Well here is the best analogy I can come with.... Let's say you are stuck on an Island with just a few people and lets say you are the only one who grows corn.... Since you are the only one who grows corn your product is worth a lot right... Ok lets say that everyone on that same island decides to grow corn now there is and influx of corn on the island and your corn is worth a lot less... The same way with money if there is more floating around the money already in circulation is worth less cause there is so much more to be had. This has happend before in 1923 in Weimar, Germany when the Germans decided to print more money to pay debts and it caused Hyperinflation, which means that the German Currency lost its value. So you would see people with barrels of money just to buy a loaf of bread. Also watch the stock market when the U.S. Treasury printed all that money the price of gold went up 50 dollars, because the investors know that the value of the U.S. dollar will go down because of the influx of new printed money... President Obama better start trying something else because his popularity is falling fast.......
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