GOLD (COMEX) geithner unveils next tarp tonight

Originally posted by shimmer ↑

Hi

I am still grappling with the idea how one sells 'toxic assets'. For example, assume I lost $100 000 in the market downturn. This affects my ability to 'invest in the stock market' considerably, thus having an effect on everyone who benefits from my activities; shops I purchase goods from, my family etc. The $100 000 were all lost on shares in companies who have gone broke on me.

The Government now 'buys' those shares I lost money on, thus becoming the owner of an illiquid asset. The Government has nothing, but I have a further $100 000 to play around with. I know I should really put it into something productive like a small business or a part payment into some real estate, but, no, I sit on it for quite a while, and then I start investing in the stock market again. This is alright for the stocks I pick in the stockmarket - and also depends on my investing style; but wildly generalising: for the general economy it would have been better if I had invested it conservatively - and IF you multiply the sum of $100 000 by 10000 and you assume I am a bank, that 'conservative' business is 'lending' to people, businesses and depositing people's money, paying interest and so on.

In the background there is a deal with my 'buyer' that sometime in the future I will buy those 'assets' back again. Or is there? What are the real conditions of the buying of the toxic assets?

I think we need to know a lot more, because at the present most people think that 'purchase' of toxic debt is just a ledger entry, which, for conciliation purposes, logic suggests that a lot of extra paper money is being put into circulation, i.e. being printed; thus eating into the purchasing power of the currency and spreading the debt on the whole population and on everyone who owns American dollars.

Result: Mega Inflation

Will it be good for the price of gold? You bet it will.
Will the increase in the price of gold be commensurate or proportional? You bet it won't.

Just my reading of the situation right now.

A positive outcome would be that a much more chastened mindset could be operating under the watchful eye of an intelligent administration and that would be to the good of all.

Taurisk