The coins \u2013 from dollar to dime \u2013 are always Round. They have to roll. If they don\u2019t, they stop and
with that the life of all citizens comes to a screeching halt. That is what is known in modern
parlance as \u201cStoppage of Economy\u201d. Some call it Recession; some call it Depression if the stoppage
is prolonged.

Some call this activity as \u201cfreezing of liquidity\u201d or \u201cCredit Freeze\u201d. The money becomes in short
supply, its real demand increases, the real supply does not match the demand, and it\u2019s borrowing
cost increases. The FED tries to revive the economy by pumping in trillions of dollars where only
5% would have been enough. But it is not. Fed\u2019s disbursement is not target specific.

\u00a9 2009 Anil Selarka (Kalidas) \u2013 All Rights are Reserved.
General permission granted to qualified students, professors, lecturers, for their local projects. Also to Newspapers, e-Zines,
Magazines provided they cite this Author as the source.

The liquidity is not only the quantum of money or Mass alone. It has speed, also called \u201cVelocity\u201d. When they get together, it is called \u201cliquidity\u201d.

If $ 1 million rotates or changes hand from one to another 12 times a year, the liquidity is $12 Millions. Instead, if $12 Millions are printed, but they remained in banks vault, or do not circulate, the resultant liquidity is Zero.

The recent mass printing of $ 2 trillions by reckless Bernanke has no effect. They have become a dead inventory. It has no storage cost, however. It is not real money which is called \u201clegal tender\u201d - they are electronic money or plastic money, changing not hands but the accounts in which they are credited. They are mostly book entry money.

If Bernanke had printed $ 2 trillions in physical paper, over 6 lanes High Way 500 Miles long
would have been covered by $ 10 notes lying neck to neck or in bumper to bumper traffic in auto
terms.

For over 2 decades, the \u201cPhysical Money\u201d has been increasingly replaced by \u201cElectronic Money \u201cor what we call the Plastic Money. ATM Card, Credit card, debit card, insurance card, travel card, or name anything you like. While the real money or legal tender is issued by the Federal Reserve, the plastic money is being issued by any Tom, Dick and Harry bank.

Bernanke\u2019s largesse of $ 2 trillions or $ 2000 Billions is sort of \u201cblotter money\u201d similar to \u201ctissue papers\u201d. There is so much of red ink in the bigger bank\u2019s balance sheets, which the moment the Fed gives them these \u201cBlotter Billions, they soak up the \u201cred ink\u201d in their balance sheets and become instantly useless. The new money with Bernanke and Paulson stamp act as \u201cbutt wiper\u201d and goes down the drain.

Often you may have experienced the car skidding into a wet ground. The wheel rolls, but the car does not come out of the ditch. You need 2 or 3 persons or simple tricks to place a wooden plank in the front of the wheel and then need gentle push from behind. There you are - the car is out of the ditch on the road again. The economy needs such deft handling.

Both Bernanke and Paulson are the greatest dumb heads America has ever produced. The
universities that awarded them degrees should seriously consider recalling them from these mutt
heads for causing chaos in the money markets with the utter display of lack of common sense.

\u00a9 2009 Anil Selarka (Kalidas) \u2013 All Rights are Reserved.
General permission granted to qualified students, professors, lecturers, for their local projects. Also to Newspapers, e-Zines,
Magazines provided they cite this Author as the source.

Look at these mutt heads. They would give $430 billions of assistance to bankrupt Citigroup, who
then fires 75,000 employees, $127 Billions to AIG and billions of dollars to worthless banks or
brokers. However, they but would not give even $ 34 billions to Auto makers, who provide
millions of jobs to the employees of auto industries, dealers and distributors.

a. Say, FED will lend $100 Millions to the banks @ 3% (or any rate FED may chose) for
incremental housing credits. That is, if their housing finance increases by fresh lending,
only that portion will qualify for refinancing at lower rates. (subject to Home Mortgage
rate not to exceed 2% over FED refinancing rates. This will ensure that the benefits of
lower credit costs are passed on to the consumers)

b. Say, FED will lend $100 Millions to the banks @ 3% (or any rate FED may chose) for
Auto Financing in respect of incremental Auto financing line to the borrowers who buy
the NEW automobiles made by 3 troubled Auto makers (subject to Auto Financing
Rates do not exceed 3% over FED refinancing rates in respect of incremental credits to
Auto finance sectors.)

ii. And two, it will generate demand for new automobiles made by 3 Auto
manufacturers who are facing sagging demand for their vehicles. This will save
jobs in auto industry, ancillary industries, dealers and distributers ends.

c. Say, FED will lend $ 100 Millions to the banks @ 3% (or any rates FED may chose) for incremental credit in the form of fresh credit card advance subject to charged interest does not exceed 4% over FED refinancing rates for regular credit card advance and 6% over irregular credit card advance.

ii. Good borrowers with regular repayment records are encouraged by limiting
interest rates to 3% over FED refinancing rates. If FED rates are 3%, the interest
to consumers will be limited to 6% only.

iii. Worsening borrowers who are not able to repay in time, will be discouraged to pay higher rate of interest by extra 1% (or more). However, their outstanding under Credit Card do not get inflated by usurious rate of interest or hidden charges levied by the bank. This will serve as \u201cautomatic control\u201d on bank\u2019s lending practices.

iv. Defaulting borrowers, who are not able to repay their debt under credit card
may be asked to pay higher rates than normal. Such defaulters take lot of
management time of the lender. They should be compensated for carrying
potentially bad advance. Exceptions may be made by the lender to convert the
advance into MIL or Monthly Installment Loan if the borrower had lost the job
and searching for new one.