What will Your Post-Splat America Look Like?

The Federal Reserve has destroyed its balance sheet by exchanging Treasuries for toxic, worthless paper in trying to keep the commercial and the investment banks alive. There is a mathematical limit to all interventions because the means undermine the purpose. This explains the exponential increase in credit derivatives reported by BIS.

The situation is dire, so dire, "urgently required" action by Congress, even if there were something potentially effective and they knew what to do, will solve nothing.

The magnitude of the problem so exceeds the size of the entire US real economy, both income and assets, that $700 or $1000 billion ($1 trillion) is less than 1/1000 of what is needed.

Besides, none of this "money" is real. It's all credit lines, magic, an illusion that works until people no longer believe. If you create $1200 trillion (the latest BIS figure for toxic credit derivatives) you don't fix the problem. You create a $2,400 trillion problem.

Numbers are all over the place. Most are to the low side of incomprehensible. Monty Guild thinks a bailout will only amount to $5 to $20 Trillion.

There is some opposition to the plan, with people beginning to realize it is completely authoritarian. Epithets like "Comrade" and "King" are being appended to Paulson and Henry. Still, I would be shocked were the Nincompoops in DC prepared to take their medicine now rather than later. Even some long time purveyors of the "Freedom" Message continue to think there's a role for Government, as long as the Government roll includes them. Something will pass. We will elect a new Occupant to fill the void of Current Occupant on Pennsylvania Avenue. That will change nothing for the better.

This got me thinking that although we have had a relatively authoritarian, if benign, socialist government for years, the iron fist was hidden in a velvet glove, the authoritarian nature of the state, hidden behind rhetoric of freedom, democracy, choice, free markets, free press, free elections, and so forth, none of which actually were true. The two pictures, reality and what we tell ourselves, the words we use, are at odds and people are not ready to switch to Communism, or State Socialism, or Fascism, or the Banker State, or whatever new name you want to invent. "They" have lied to themselves and to the people for so long even the lemmings are not prepared for that abrupt a change.

Ron Paul's "dual currency, let the people decide" proposal during the debates had a chance, though already at that time the minute hand stood 5 minutes before midnight. The others laughed. The media dismissed his suggestions. Perhaps they did not understand. Perhaps they are unable to understand.

So here we are. Bailout or no bailout, we are over the edge of the cliff and falling. To spend time discussing the kind of splat won't accomplish anything.

What is important is what we each do post-splat. The world will continue to turn. Our country will still be here. We will be here, with neighbors and friends. Paint your own mental picture of Post-Splat America. That is what you will move toward, so be sure it's the ideal, what you actually want.