So how can the little guy survive this Bailout mess?

Survive is in the title of this post because that is the very first thing we must do. I've researched and studied this very scenario for about thirty years now . . . that is the U.S. Government going (for) broke. I am certainly not all knowing but there has been for some time two schools of thought as to how America's and the World's financial meltdown would play out. I'll cover that and an interesting question . . . just how much in total has the U.S. Government thrown at this problem.

I first became interested in how the U.S. Government was handling the public's affairs, particularly financial, back in the late 70's and early 80's when we had a similar situation develop. Yep, I lived through the 14% mortgage interest rates, had one myself, and sat in the gas lines during the oil embargo. Today is very much different than then. Yes, the country was in crisis but the events only showed we were vulnerable but not powerless, defenseless, and helpless. How is yesterday and today different?

Firstly, most everyone felt the oil shortage was not an actual lack of oil supply. That was notwithstanding the oil companies dispatching pitch men through the land to tell us how the oil was running out. I was in high school back then and sat through a "presentation" by an oil man who had all the facts and charts to show the world was just about out of oil. It just did not fly with me because the whole story did not explain how "suddenly" we were hearing about all this. And, then there was the little issue about OPEC putting on an embargo. Everyone knew it was for political reasons. So most perceived the oil crisis as simply a money grab. And, that only fed into the concerns about the federal debt and deficits.

We all know the U.S. Government has been piling up debt for decades and we are in one heck of a pickle now. In the "stagflation" error (yes error) of thirty years ago, the general public viewed the government debt as something which could get out of hand. It was this debate at that time which caught my attention. Stagflation, a combination of recession and inflation, was something which was not thought possible. But we did in deed have just that for the very first time. I am a student of the markets for over 35 years now. The most popular view among us money nerds is the heavy government spending on the Vietnam war and the Great Society social programs along with Nixon's wage and price freeze is what caused the stagflation.

Does all this sound familiar? War, government spending, social engineering, government spending, interfering with the economy, government spending and mind boggling money creation. The bottom line today is the U.S. Government has created this mess. And, in reality we the voters are ultimately responsible because we (collectively) let it happen.

So, where are we today, right now? Using the ever so popular "clogged" plumbing metaphor, the government is pumping more and more pressure as the means, and in the hope, of clearing the financial pipes. That is the scary part! Rather than sending a snake down the pipe to poke the clog (let the poorly run companies fail), the government has revved up the money pumps and just keeps turning up the dial. What will happen when the clog does break loose?

Well, just like any old and rotten plumbing system something is bound to give way. The financial system will be overwhelmed by the amount of money pressure. Cracks will burst open, valves will blow, and our economy will get drowned in a flood of money . . . even places we didn't intend for it to go. We money nerds call this inflation. In short, what ever it is the cost will rise. And, with a recession in place already, we and the world will once again know what stagflation is.

Currently, I'm working on just how much money the U.S. Government has poured into our and the world's economies. I hope to post that soon along with the two dominate scenarios by which this financial crisis would play out.