“this may not be the usual ‘costing the taxpayers’ mantra we are used to”
“Of course this’ll cost the taxpayers. Where does the Fed get its money? Inflation, i.e. counterfeiting.”
If AIG fails then yes the taxpayers will be on the hook. If AIG succeeds as I expect them to, then the taxpayers get their 80B back plus interest plus an 80% equity stake in AIG. On the other hand we don’t know the details.
Taxpayers were on the hook no matter what, just about anyone with money in a retirement account, IRA or 401K owns a chuck of AIG anyway.
You're dreaming. Taxpayers will get jack $hit.
“If AIG fails then yes the taxpayers will be on the hook. If AIG succeeds as I expect them to, then the taxpayers get their 80B back plus interest plus an 80% equity stake in AIG. On the other hand we don’t know the details.”
Some taxpayers will get money back, just as executives and people with large shares will be saved from ruin. However, the fed ought to have the best interest of the public at large in mind. Inflating the currency to save an insolvent company probably won’t the majority of Americans in the long run. The bailout will only encourage AIG and others to continue making bad investments.
When we say we live in a capitalist society, we largely mean that we live in a profit-and-loss society. Individuals invest money in capital, and according to how the investments pan out, they make a profit or take a loss. The loss half of the equation is just as important as the profit half, in the sense that losses force people to stop investing in failing ventures. Ventures run by the government, like public education, are notorious for throwing good money after bad. If the treasury and the fed keep pumping money into failing businesses, eventually the financial market will be as free as the educational market.