Comments on: Fannie and Freddie Bailout Would Double US Public Debt http://www.contrarianprofits.com/articles/fannie-and-freddie-bailout-would-double-us-public-debt/3700 Access market-beating ideas from the world's top investment gurus on stock market investing, the gold market, ETFs, Forex trading and real estate values. Tue, 18 May 2010 05:09:46 -0500 http://wordpress.org/?v=2.8.5 hourly 1 By: Enginerd http://www.contrarianprofits.com/articles/fannie-and-freddie-bailout-would-double-us-public-debt/3700/comment-page-1#comment-1959 Enginerd Sat, 12 Jul 2008 17:24:38 +0000 http://www.contrarianprofits.com/articles/todays-credit-crisis-will-seem-like-childs-play-if-fannie-and-freddie-collapse/3700#comment-1959 Guaranteeing the GSEs wouldn't effectively double the US national debt. The proper accounting treatment would be to multiply the cost of that happening ($5 trillion) by the probability (???) and have that be the added liability to the government. In order to have this make any sense, the GSEs should pay the government premiums since it is acting as an insurance agent. Realistically, all this would do is create inflation. If the GSEs went under, Congress would need $5 trillion to bail them out. Only place to get that is by printing it. Which is what they would do, and that means an instant increase of 30-50% in the money supply. Guaranteeing the GSEs wouldn’t effectively double the US national debt. The proper accounting treatment would be to multiply the cost of that happening ($5 trillion) by the probability (???) and have that be the added liability to the government. In order to have this make any sense, the GSEs should pay the government premiums since it is acting as an insurance agent.

Realistically, all this would do is create inflation. If the GSEs went under, Congress would need $5 trillion to bail them out. Only place to get that is by printing it. Which is what they would do, and that means an instant increase of 30-50% in the money supply.

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