Someone once said that the U.S. Senate is like a "cooling saucer," where the passionate debates of the House of Representatives are tempered in the high atmosphere of the upper chamber. Tonight, when the Senate votes on a $700 billion financial rescue plan that both party leaders in the Senate are embracing, that saucer may look more like a buffet platter. The three-page bill that launched the debate in the House earlier this week has expanded to well over 400 pages. Some of the provisions, like expanded FDIC insurance amounts for bank deposits, are reportedly drawing more grassroots support. The Senate bill also reflects some tax add-ons, dealing with such topics as the refundability of the child tax credit and education tax breaks. In other words, Congress is in session and people with pens and barrels of red ink are writing into the night.
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I wouldn’t be surprised if the recent overhaul of bankruptcy legislation was designed for this economic situation; it turns human debtors into indentured servants. And that is necessary for the following reason:
The ’sssssss’ we are noticing with this credit crunch is just the leak before the big burst. This credit bubble has been inflated by a logorithmic base 10 scale of dollar creation.
The practice of using 90% of ‘real’ wealth for lending that can then be invested and re-deposited for recycling again and again for more and more credit probably has the same effect of simply printing more money. The difference between those two ways of creating wealth is that creating money by credit inflation redistributes wealth for the benefit of financiers. And printed money is real; not fake.
This credit bubble burst should, then, be creating a shortage of money. And the cure may be as simple as the government printing more money. The only problem with that scheme is that there would not be another bubble to burst to correct for over-inflation. Printed dollars don’t evaporate away like the ones the financiers are trying to sell taxpayers now.
And that is why those who have engineered this bubble need those new draconian bankruptcy laws. Only wage earners can turn this fake money into real wealth. And that is why the Bush administration and other supporters of the great bailout plan are adamantly against giving bankruptcy judges the right to restructure debt according to who is most responsible for making bad loans.
Bryant Arms
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