The True Meaning of the Word “Bailout”

04/06/11 Tampa, Florida – It doesn’t take a raving cynic like me, rabidly spewing flecks of spittle while screaming in outrage, “We’re freaking doomed!” to realize that, regardless of what you have heard, the federal government will, indeed, bail the states out of their messes.

In fact, it already has, and it will do more and more of it.
Here is the way it is working so far: the federal government loans money to the states to pay for unemployment benefits. Then the federal government passes a law that says the states don’t have to start to pay back any money at all, interest or principal, for five years, and, in fact, interest on the borrowed money does not even start accruing until then!
If “loaning money and not wanting it back” ain’t a bailout, then I am not sure what “bailout” means, which is not surprising, in that I apparently do not understand what a lot of things mean, like when I got that date with Wanda, who said, “If you try to kiss me one more time, something is going to happen to you,” which is so nebulous compared with the usual, “Try to kiss me one more time and I am going to shoot you with the pistol I have in my purse,” or, “Try to kiss me one more time and I’ll have my daddy shoot you with the gun he has in HIS purse!”
Well, as it turned out, Wanda almost ruptured my spleen as a result of my not understanding the true meaning of what she said, which happens all the time, like, for example, I was in line at the pharmacy and I was, you know, passing the time constructively by graciously educating the other people in line about how We’re Freaking Doomed (WFD) because the Federal Reserve has created so much money that it created bubbles in stocks, and bonds, and housing, and derivatives, and size of government in a long, crippling, simmering inflation in consumer prices, and now the evil Federal Reserve is creating even MORE money, in quantities that are Whole Freaking Multiples (WFM) of the monetary horrors of the Federal Reserve under the previous chairman, the moronic Alan Greenspan (1987-2006)!
This is when the people all started complaining, “Shut up about the Federal Reserve and the inflationary horror that will destroy us!”
Here’s another case where I misunderstood what they meant. I thought they meant that they wanted me to expound on some other important topic that ALSO proved that We’re Freaking Doomed (WFD)!
So I started telling them that the equivalent of 7 out of 12 people work for the government, a school system, a tax-supported private agency or a non-profit organization, which means that more than half of all the workers in the USA do not make a profit by their labors with which to pay taxes to support the government’s spending!
My voice rising to an exciting crescendo, I shouted, “What in the hell kind of insane economic system, even from another dimension beyond space and time, can have a minority of all workers make enough profit to support themselves, the government, and still possibly begin to pay for incomes of the majority of workers? And especially when they all owe, individually and collectively, more money than the human mind can comprehend?”“
I was surprised that nobody said, “Excellent! Well said! Bravo! You have given us plenty to think about, and hopefully help us to mend our stupid ways! Thank you, Handsome Informed Stranger (HIS)!”
I was further surprised when, again, I was met with a chorus of angry voices saying, “Shut up! Shut up!” to which I cleverly replied “No, YOU shut up!”
It was then I realized my mistake: They were all just trusting and ignorant people just trying to get along, and they liked it that way. I sigh.
Unfortunately for them, they will pay for their folly, as they subsequently did not receive the invaluable Mogambo Gift Of Investing Wisdom (MGOIW), which is to buy gold and silver when the Federal Reserve is creating so much money, especially when they are doing it for such a long time, and doubly-especially when they are creating increasingly, insanely, unbelievably, astoundingly, staggeringly MORE money to support governmental spending that is – literally! – half the economy, and have plans to continue doing it for a long time, too!
I mean, simply buying gold and silver to save one’s financial butt is the way it has worked all throughout history, so how simple can it be? Whee! This investing stuff is easy!
The Mogambo Guru
for The Daily Reckoning
Richard Daughty (Mogambo Guru) is general partner and COO for Smith Consultant Group, serving the financial and medical communities, and the writer/publisher of the Mogambo Guru economic newsletter, an avocational exercise to better heap disrespect on those who desperately deserve it. The Mogambo Guru is quoted frequently in Barron's, The Daily Reckoning , and other fine publications.
View articles by The Mogambo Guru The articles and commentary featured on the Daily Reckoning are presented by Agora Financial.

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