Saturday, November 1, 2008

My take on the economical rescue plan

The bottom line of rescue plan of the US government and other governments around the world basically revolves around giving money (and lots of it) to financial institutes and other businesses. I didn't read anywhere about the issue of the source of this money.
As I see it, there are four possible sources:
  1. Increasing the deficit in the budget
  2. Raising taxes
  3. Shifting money that was targeted to other causes (like education, health, etc.) to become the money for the rescue plan.
  4. Printing more money

The first option means increasing the US debt, which means a very cloudy future (debts should be returned eventually)

The second option is just making life even harder today

The third option means more unemployment and loss of future success

The forth option means inflation

All of them are bad. So just to summarize, the core idea in the plan is taking money from the future, invest it today and hope that somehow things would work out for the best, because if not, both the present and the future would be lousy.

But I may be wrong here

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