Unlimited Money to the Banks is Limited

The bailout plan wants to give unlimited cash to the banks that need it with the only restriction is to use it prudently!  Well if you look at the root causes of this you will see that the unlimited money to the banks is actually limited.  It’s really borrowed money for unlimited borrowing.

The commerical banks have an unlimted ability to create money…

Unfortunately, consumers have a limited ability to request it’s creation.

This is just to keep the banks from imploding due to the drop in consumer requests to create new money…the circulation is broken…

This will do nothing to address the inability of the consumers to request the required amount of new money to service the continued existance of the previously created money.

It’s the difference between swimming to safety or treading water until you grow tired and drown.

The unlimted is ultimately limited…

How FED borrowing works…Is a commercial bank uses its income or an assest as collateral for a loan short term at wholesale rates that it will sell to consumers for long term at retail rates.

Without a consumer signing on the dotted line and servicing it….jigs up.

like all the sub primes that blew up…scraped the bottom of the barrel and found signers….but they could not service them…poof game over.

And at some point increasing the supply of treasuries will cause rates to rise…Which will cause further consumer demand destruction.

The consumers are strapped and can not feed the top anymore.. Maximum borrowing potential has been reached.