Imagine that you are taking a class. You work really hard to do well in the class and end up with an average grade, a B or C. A couple of rows behind you (when they show up) are a bunch of really rich kids. They skip class, blow off assignments, do really poorly on tests. They’re going to fail. It’s a given. Except that their parents have given huge donations to the school’s board of trustees. The dean steps in and says, we can’t allow you to fail. It would have too big of an effect on our budget. So what we’re going to do is put the grades on a curve. All of your bad grades are wiped out, everyone passes with at least a C. That grade that you worked so hard for is now worth much less.
This is exactly what is going on with the big bailout the government is working on. The banks aren’t allowed to fail because they are too big. Billions of dollars are being pumped in to save them which makes the average person’s dollar worth less. This is inflation.
The dollar will continue to lose value until it fails completely. If a large nation like China dumps their dollars, it will happen sooner. Prices will continue to rise, making it much harder for the average worker to afford basic needs such as food and a place to sleep.
Personally, I think these banks should be allowed to fail. For something so large to topple so completely means that it was a bad system to begin with. It appears that these institutions employed very poor practices in order to turn the largest profit. Now it’s come back to bite them. Let it. Allowing them to continue this is just wrong and will only hurt us in the end.