Why Bailouts Hurt Free Markets

Wall Street cheered the government seizure of Fannie Mae and Freddie Mac, but what does this historic bailout mean for investors? U.S. taxpayers are again on the hook, while Wall St. cashes in.

#1) American taxpayers will pay dearly for this bailout, as well as Fannie Mae shareholders and employees. No wonder Wall Street applauded the news, the government has again postponed the day of reckoning. The U.S. free market is at war with modern socialistic-communism economics.

"America is more communist than China is right now. You can see that this is welfare of the rich, it is socialism for the rich… it's just bailing out financial institutions," investor Jim Rogers, CEO of Rogers Holdings, told CNBC.

#2) This government action will ultimately hurt the housing market as higher interest rates and taxes push more homeowners into foreclosure, prolonging the housing crisis.

"Seizing Fannie and Freddie from their stockholders as a way of propping up home prices by making mortgages cheaper and more readily available than they would be on a free-market basis is being touted as a good deal for taxpayers and for homeowners. It will make property rights less secure in this country for generations to come," reports NY Sun.

#3) The US economy today is on a knife edge, toggling between recession and inflation, also known as stagflation. This means the next bailout (beyond U.S. banks) could be the dollar itself.

"Any US dollar injection big enough to avert a depression triggers runaway inflation. If the Federal government bails them all out, the die would be cast for inflation unseen in the West since 1923 Germany. If no bailout: Hello, 1929. Gold helps you either way," reports Harry Schultz, editor of the pestigious International Letter to Marketwatch.

#4) What's next, a government bailout of GM, Ford and Boeing? Historically government bailouts make things worse over the long term, despite attempts to boost confidence in the short term.

"The takeover of Fannie Mae and Freddie Mac is likely to cause big problems for hundreds of community banks nationwide and could lead to a new round of bank failures. It is impossible to know how many banks are now at risk as a result of the government action," reports CNN.

#5. The only way to protect your assets is to take immediate action to put yourself back on a personal gold standard. Learn how to protect and grow wealth during chaotic economic times with gold, while prices are still at 2008 lows near $800 an ounce!