The idea that government can some how prop up housing prices that where grossly inflated, largely due in part to the government’s involvement in the housing market in the first place, boggles my mind and leaves a lot of unanswered questions. First being is how are we going to pay for all this new spending and what happens when all this printing of money causes run away inflation, which will have a direct negative impact on the housing market, by the Fed having to raise interest rates in order to control inflation.Higher interest rates will lead to higher unemployment due to the fact that employers can’t obtain affordable lines of credit in order to meet payroll and other short term debt obligations. This is a very real threat that this administration as failed to address and for good reason. Because reality is this; it doesn’t matter what action they take to “fix” the housing market, all attempts of trying to reverse the market is going to do more harm than good and many politicians from both sides of the aisle know this. But they feel the overwhelming need to act, even if it’s going to do more harm than good, for nothing else then to give the impression they “care”, but in reality the only thing they really care about is getting re-elected.The wisest action of our politician’s is inaction, stop trying to be the hero’s you’re not, you’re making things much worse then need be. All of this bad debt has to flush out of the system, so the markets can correct themselves. If correcting of the market’s means some businesses fail and people lose their homes, which it will, so be it. It is a hell of a lot better than the alternative. Failure is not the end all; instead it’s a fresh start to a new beginning.But oh no, can’t sit by and do nothing, that would be politically unacceptable. So what they do; they pump massive amounts of our money into pet projects along with giving billions more to the banks, all in the name of saving the economy. But as we have seen with the first 350 billion it didn’t go as planned, which was predictable considering the situation.Instead banks took the money and hoarded it to shore up their own finances and acquire other banks. It did nothing to increase the demand for housing as sales numbers point out. If I as an individual am hemorrhaging money to the point where I am on the verge of being insolvent, you think that I am going to do the same thing that got me into that dire situation in the first place. Hence the reason the banks decided to play it safe by keeping the money instead of lending it out. Keep in mind this is all being orchestrated by the very same people that help us get into this mess in the first place.Here are the facts as we know them. President Obama wants to cut the deficit in half by 2013. Sixty-eight percent of small business owners under Obamas’ tax plan are going to end up paying higher taxes. Seventy percent of all workers in this country are employed by small businesses. Even if you where to confiscate all the money earned from people making $75,000 and above, it still isn’t enough to cover the cost of the new spending that has been proposed thus far by this administration.As the numbers show it’s mathematically impossible to cut the deficit in half as the President stated he intends to do without significantly increasing taxes on small business and the middle class. As most people are already aware of; increased taxation deprives the private sector of needed capital it takes for expansion and job creation, assuming the economy is healthy. But as we all know this isn’t the case at all, so now it becomes more of an issue of being able to keep more capital in the private sector as a means to stop the bleeding, rather than looking to expand and increase the number of employees. If any one has doubt’s that higher unemployment will lead to a further decrease in home values, just take a look at the State of Michigan.Regardless of where you might stand on the political spectrum, one thing we can all agree on is the new administrations numbers don’t add up. The bottom line is that the federal government has proposed so much new spending through this latest “stimulus” bill that it’s nearly impossible for hyper-inflation not to occur within the next ten years, as history has shown us.The Federal Reserve will have no choice but to raise interest rates putting further down ward pressure on housing prices causing decreased demand due to higher monthly payments. The federal government will be forced to cut spending which will lead to decreased amounts of money going back to the states to pay for “essential” services, forcing state governments to raise property taxes (at least until people rebel), even though property values will continue to drop. Increased taxes on small businesses will cause higher unemployment causing the demand for housing to fall. As employment becomes ever harder to come by, people will be forced to opt for lower paying employment decreasing their ability to buy higher priced homes.The people that are employed will have essentially lost their ability to collectively bargain for any real wage or benefit increases (yes, even the big Unions, look at the UAW). Real wages will continue to decrease as the buying power of the dollar continues to be eroded away as hyper inflation sets in, having a major negative impact on the standard of living in this country. The stock market will continue to drop as corporate earnings fall and corporate tax rates rise, just another factor that will contribute to the lowering of property values, as people have less money to put towards a down payment, a practice that has reemerged in recent months as the banks try to protect against future losses.Americans will no doubt see a major decrease in their standard of living within the next ten years, falling housing prices are just the tip of the iceberg. Don’t get me wrong there will be some good to come out of this latest stimulus bill in the form of much needed infrastructure improvement and construction jobs, but the long term negative implications will far out weigh any short term benefits.Capitalism without failure is like life without risk; impossible. Imagine life without risk, we would all be driving around going 110 mph without regards to our own safety or anybody else’s for that matter because we would all be immortals without a care in the world. In essence this is exactly what happened in the secondary mortgage markets. These banks went around acting like immortals, by passing the risk off to the Federal government via Freddie Mac and Fannie Mae. Our governments’ policy of “too big to fail” has created banking immortals propped up by us the American taxpayers, we are going to ultimately be the ones that are going to be killed via hyperinflation, as a direct result of our governments irresponsible and reckless actions. Good bye capitalism, you’ll be dearly missed by many, thanks for the memories.