The bailout & the average American.(THE LAST WORD)

As our nation experiences an economic meltdown, those who brought it on are guaranteeing that it will get worse without massive government intervention. Yet they refuse to take the proper action that will solve the problem in the long run. Just the opposite, in fact.

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No literate American is unaware of the drastic measures recently taken--with more on the way--to shore up various Wall Street firms that should be allowed to disappear. Bear Stearns was bailed out at the last minute with $29 billion. The takeover of worthless mortgages held by California's IndyMac Bank will cost $8.9 billion. Fannie Mae and Freddie Mac, both government-sponsored enterprises, will receive an estimated $200 billion to cover mortgages that never should have been created. Insurance giant AIG got an $85 billion rescue package. Newsletter author Joel Skousen reports that the Federal Reserve ponied up $110 billion for European banks, $60 billion for the Bank of Japan, and $10 billion for the Bank of Canada. And now Treasury Secretary Paulson and Fed Chairman Bernanke want Congress to create a $700 billion slush fund to save more failing institutions.

What's of major importance is almost always ignored. It is: where does this money come from? The answer is that the government will add to its enormous debt, already at $9.6 trillion without even counting huge unfunded obligations into the future. Yet the already-existing debt burden has become a major drag on the economy, and adding to the debt will only make matters worse. The real victim in this gigantic departure from free enterprise is the hard-working, tax-paying, inflation-suffering American.

Consider that only two months ago, White House Budget Director Jim Nussle projected a record-setting $482 billion deficit for Fiscal 2009 (it begins October 1, 2008). That projection doesn't include the costs for military operations in Iraq and Afghanistan. The debt for Fiscal 2008 (ending September 30) will certainly top the projection announced by Nussle.

Where does the federal government get the money beyond what it already takes from us? It either borrows it (much of it from China) or turns to its partner, the Federal Reserve, to print it. Freshly printed dollars cut into the value of all dollars--which means that all Americans will bear the brunt of this burden at supermarkets and gas stations, and with less-valuable paychecks and diminished worth of insurance policies, retirement funds, etc.

As for the Federal Reserve, it's nice to know that some Americans are awakening to ...