Fed’s to benefit out of AIG Loan

Here is how

1. Common man pays tax

2. Tax is collected by IRS

3. IRS deposits the money into US Treasury.

4. US Treasury issues securities against that money which is utilized by Federal reserve

5. Federal Reserve has issued a loan of $85 billion to AIG and in return AIG would (hopefully) return the principal and the interest. Thus benefiting from the loan.

But the question is is that is this how a capitalist economy should work?

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1 Comment

Filed under AIG, Business, Capitalism, US

One response to “Fed’s to benefit out of AIG Loan

  1. I think the American taxpayers is right to feel angered, particularly given government oversight and regulation could surely have prevented this fallout. However, as much as I am against state intervention, I am convinced that the Fed had no choice, the speculators would have had a field day, with every company loosely associated with AIG, had they been allowed to fail.

    The cost in terms of pensions, market confidence and so on, would have been immeasurable. Just my humble opinion, I am no economist.

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