Tuesday, January 12, 2010

Suspension of mark-to-market would have saved taxpayers billions $$

It's official...we can put an absolute concrete value on the minimum that would have been saved by taxpayers last year had the SEC suspended "mark-to-market" accounting rules during the crisis.

That number is $45 billion.

Where do I come up with that?

Simple...it's the profit that the Fed earned in 2009. That profit came mostly from owning the supposed "toxic" assets of financial institutions. It's money that could have went to taxpayers (shareholders) had the government allowed a suspension of mark-to-market asset pricing.

Instead, the profit goes to the black hole of the government. Sad, because it's a sum that the private sector could have used in this awful economy.

This is an example of why the whole concept of "taxpayer on the hook" is backward. The taxpayer is on the hook or worse--loses--when the government is instructed to make money on the absurd notion that that somehow helps the taxpayer. When the government makes money, the taxpayer loses by definition.

The government has a monopoly on the creation of money under the current monetary system. If it is allowed to do this to the degree that the nation's output is maximized, without interference, we become rich and prosperous.

However, when the government is instructed to "make money" by transacting in a commercial fashion with a private sector enterprise, then the government's money profit ALWAYS equates to the private sector's money loss.

1 comment:

googleheim said...

what about last year swaps when the dollar spiked ?

- the fed profited $200 billion ?

what about after Resolution Trust company took all the Savings and Loan assets from late 80's and sold them over time with a profit of $200 billion or whatever ?

what makes it a good thing for those in the real economy ( citizens ) and the fed & tsy ?

then what makes it a bad thing for the real economy however a good thing for the fed & tsy ?