Where's all the "lost" money gone?

This is what I don't get. If I drop a penny in the street, I've lost that penny. Maybe on a temporary basis if I find it again. If someone else finds it, he or she is the proud possessor. It's only really lost if it falls into the sewers never to be seen again. The penny is only useful if used for a purchase or lent out with interest. Othewise it has no value.

All this talk about banks losing money is very mystifying. If they've lost it, who has got it now? Unless they burnt bundles of cash, somebody has the use of it now. When companies go bust, you can bet your bottom dollar that somebody has made use of money in ways that were not always appropriate. But unless it's down the drain it is somewhere.

So where is this $700 billion coming from and where is it going to? I know that as night follows day, some people are going to see some of this trickle through their bank accounts. It isn't all going down the drain, is it?

The only person to "lose" his money, and his jewels mainly, was King John in the Wash. The loss of his personal belongings affected his health and state of mind. It is said he succumbed to dysentery and died shortly afterwards. Well, he was justified in feeling his loss. But those who gamble on future profits may obtain money from others or find it slipping away from their hold. They know whether they have it or not.

The only other way to have money is to print it. Not a good idea for governments. There is talk of panic in the hedge funds over investors withdrawing their cash. John P. Rigas, the chief executive of Sciens Capital Management, is reported in the New York Times as saying,“It’s difficult with hedge funds because they are very fragile. By their nature they’re fragile instruments because investors can ask for their money.” So the hedge fund "loses" the money (use of) and the investor "gains" the money (use of again). We know where it is. Now unless the investor copies King John, he will put it somewhere. It will not be lost.

This is not about losing money. It is all about TRUST! "In God We Trust" is the official motto of the United States. The word trust is not to be bandied around lightly. Most of us now do not trust banks, politicians, or economic pundits. That is where we need to steady ourselves.

Trust is far more important than "losing" money.

Posted in: bail-out,banks,credit crunch,monetary policy