http://slowsmile.hypocrisy.com/2008/10/02/how-700-billion-from-the-paulson-plan-becomes-70-trillion-via-the-treasury-and-fed/

http://slowsmile.hypocrisy.com/2008/09/10/the-ravages-of-ignored-us-debt/

And since the credit mess, the dollar mess and fiscal mess have all been caused by the policies of successive US govts via their Wall Street advisers, here is the only possible solution to these problems. An article called “Menu of Pain”:

http://slowsmile.hypocrisy.com/2008/09/29/menu-of-pain/

The reasons given for the coming massive inflation are by no means complete. My own view is that – whether the $700 Paulson Plan is passed or not – Mainstreet America is going to suffer badly any way you look at it. Here’s why.

Most articles which address the effects of the Paulson Bail-Out talk directly about the Economic view, the Wall Street view, the Mainstreet view and the Government view. Funny that no-one ever talks about the Paulson Plan with regard to banking laws and banking mechanisms. If people studied it from this aspect – they would fully realize the perverse affects of The Paulson Plan.

Put simply, The Fed is a Bank – and therefore acts under the normal banking laws and banking mechanisms of the US. One of these legal mechanisms is called ‘Fractional Reserve Lending’(FRL). This mechanism allows any bank to multiply its direct cash holdings by 10 in order to lend out money as loans. Simple and legal.

So when The Fed – a bank – receives the $700 billion – they will simply multiply this amount by 10, so that it has now grown to $7 trillion. And when the Fed ‘lends’ this money to save other financial institutions – these banks can also multiply their amounts received by 10 using the FRL mechanism.

So, now the amount has grown to $70 trillion out of thin air.

My question to you is this – what will happen to the dollar when this $70 trillion suddenly hits the Mainstreet American Economy ? And who will suffer the most ?

It’s a Mainstreet massacre any way you look at it.