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>It is a first time in history that such ridiculous numbers are summoned. Not true. In 1984, in Chile, there was a shitstorm that warranted a 14 billion dolla

>It is a first time in history that such ridiculous numbers are summoned. Not true. In 1984, in Chile, there was a shitstorm that warranted a 14 billion dollar bailout. Chile's population was ~12M, so the bailout was just over a thousand dollars per capita. Now, the bailout in US is over two thousand dollars per capita (700B/300M), and between 1984 and today, the dollar has lost about half its purchasing power (or more, depending on who you ask). So, it's about the same size. Keep in mind Chileans were, and still are, much poorer than Americans are today. So yes, there have been bailouts this size. On a side note, the Chilean bailout was a success. But then, the Chilean Ministerio de Hacienda (Fed, basically) was really big on Friedman and the Chicago School in general. Plus, historically, it has always kept its shit together. Don't know if this is the case with the Federal Reserve.

peakok 18y ago
This is not comparable because the 14 billions DOLLARS were prolly backed by the FMI wich meant that the United States and Europe were behind the bailout. Even if only the U.S were behind, 14 billions was really not much as we can see today. But today the United States ARE the heart of the system. It's all a matter of confidence now : will the world trust the U.S banking system enough, will the world trust the dollar enough, in the end : will the world trust the U.S autorities ? The trust must comes directly from the U.S now, because there is no international agency backing up your decisions. ALL the stability in the system comes from this confidence. The U.S. dollar was the most trusted money in the world.
- Retric 18y ago
  Which brings up an interesting point. I think the number of dollars used outside the US complicates the issue. Because of fractional reserve banking we can't control how fast the rest of the world inflates or deflates the dollar. Also we export 15% of our GDP and import considerably more than that so I think the rate that the rest of the world tanks is going to be vary important to our economy.

peakok 18y ago

This is not comparable because the 14 billions DOLLARS were prolly backed by the FMI wich meant that the United States and Europe were behind the bailout. Even if only the U.S were behind, 14 billions was really not much as we can see today. But today the United States ARE the heart of the system. It's all a matter of confidence now : will the world trust the U.S banking system enough, will the world trust the dollar enough, in the end : will the world trust the U.S autorities ? The trust must comes directly from the U.S now, because there is no international agency backing up your decisions. ALL the stability in the system comes from this confidence. The U.S. dollar was the most trusted money in the world.

Retric 18y ago
Which brings up an interesting point. I think the number of dollars used outside the US complicates the issue. Because of fractional reserve banking we can't control how fast the rest of the world inflates or deflates the dollar. Also we export 15% of our GDP and import considerably more than that so I think the rate that the rest of the world tanks is going to be vary important to our economy.