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.