If the total deposits in the USA are in the area if 7 trillion, how much of that is really at risk? Maybe 2 trillion at the most?
So suppose that instead of the insane stimulus bill, the government had agreed to insure any and all accounts, whether they be $50,000 or $500 million.
Then just let the bad banks go bust with no such rule as too big to fail.
Not all banks would go bust.
Most that would go bust have assets that would be purchased by others resulting in a much less than total loss.
Therefore, even if 1/3 of the banks went bust, the loss to the government would not be $2 trillion.
As it is, we are setting ourselves up to a cost far exceeding $2 trillion and are not really bringing about a cure.
The real cure is to get rid of the bad banks and put their management on the roles of the unemployed where they might find a job more in line with their capabilities.
In a nutshell, our entire monetary system and economy is built upon debt. The government wants money. It can either openly tax, which it would rather not do, if avoidable, or it can write an IOU called a bond and sell that at a set interest rate to any buyers. Sometimes the citizens buy, and the money just moves from one place to another. But usually there are plenty of bonds that no one buys. The Federal Reserve buys those bonds, and uses them as the go-ahead to print more money. This influx of new money devalues the money that is already out there. This is the ‘hidden tax’ called inflation.
The Federal Reserve then uses the IOUs (bonds) as a sort of asset to say, “The US government owes us this much money.” They then use that DEBT as an ASSET and print MORE money.
The point is this: ALL of this money is LENT out. The banking system makes its money on the interest paid on these loans. They have ZERO interest in any of these debts being paid off, because that would mean no interest is being paid. They also don't want banks to fail, because they then lose the debt/asset POTENTIAL of those banks. Thus, they have the failing banks absorbed by more solvent banks so that the debt/asset potential can be realized (interest can continue to be paid).
So, I understand your idea. But there is no one in charge that would ever try to resolve this issue seriously.
We are being deliberately lied to. Our economy is being deliberately ruined. No one in the government or Fed has any inclination to pay off this stimulus. I truly believe, now, that the goal is to bankrupt America so that the people demand a world economic ministry and a global currency.
Not bad domestically but the internationalists may not like holding the empty bag of CDS’s.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aoIzVOnqSHgg&refer=home
The supremacy of finance capital over all other forms of capital means the predominance of the rentier and of the financial oligarchy; it means that a small number of financially “powerful” states stand out among all the rest. The extent to which this process is going on may be judged from the statistics on emissions, i.e., the issue of all kinds of securities. - Vladimir Ilyich Lenin