I have a question for those economists amongst us

[whosinpower]

I've been following the economic crisis closely and trying to muddle through it to understand it all in my mind.

If the Paulson deal were to go through Congress - with its reeking amount of between 700 - 1 trillion dollars(amount varies by different sources)then what is to stop the US greenback from taking a huge nosedive downward?

I am no economist, but it seems to me when you flood the market with US dollars to buy up crap - then those US dollars are worth crap.

And, it seems to me that the general US capitalism model - has failed. Failure is a harsh word - but it is unsustainable - and we have reached the end of the line. This bailout does not stop the failure - that already happened. All this bailout does is lessen the pain for a some - but the fundamentals that got us where we are are unbalanced and the bailout does not resteady the scales so to speak. So - it cannot work longterm to stave off the inevitable. If that is the case - then why devalue the eroding US greenback in the first place?

And I will also note that this is also an opportunity. Out of failure comes a chance to seriously reconsider fundamental beliefs to grow a newer more fair model. A chance to reconsider the mantra that more stuff makes you more happy. An opportunity to witness the birth of a new era - and with our wisdom and help - an era that will allow our grandchildren to be proud of our strength,ingenuity, wisdom and fortitude.

[Darwins Doberman]

1. you're right about inflation

Putting an extra $700 billion to $1 trillion into the economy just like that weakens the dollar substaintially, but that is common sense. Which seems to be lacking in Henry Paulson's mind at the moment.

This country will never accept a socialistic model against the thinking of "more stuff makes you happier." It will accept gradual socialization of essential things like healthcare, etc. but one in which there's a disregard of individualism and no more desire to do better than the dude next door will never, ever happen here. If for no other reason, there is no genuine left movement to discuss these ideas on a national level. We could go through a depression worse than the 1930s, and the furthest left our "mainstream" parties would go is maybe a little to the right of England's current Labour Party.

[applegrove]

2. Yes increasing the debt could lower the dollar but a huge finanacial collapse would lower the dollar

even more IMHO.