Billion dollar bailouts mask the problem of a fiat currency

I'm sure we've all heard of the multi-billion dollar bailouts currently being proposed and advocated by The Inside-the-Beltway, Kool-aid drinking, Incumbent Party a strong bipartisan coalition in Washington. But I think the NYTimes had a useful description yesterday:

The purpose of the rescue proposal — which would allow the Treasury Department to use taxpayer dollars to buy obligations and securities of Fannie Mae and Freddie Mac, if needed, to keep the companies afloat — is to restore confidence in the United States’ ability and commitment to contain the financial crisis.

Unfortunately, with $53,000,000,000,000 in unfunded long-term liabilities, I ain't buyin' what Secretary Paulson is selling. And keep in mind the NYTimes recent reporting (per the Bethel Beacon):

"pension funds, Wall Street banks and other large investors that have no intention on taking delivery of fuel have increasingly pumped money into contracts for oil and other commodities as a hedge against inflation when the dollar falls,"

Therein lies the problem.

If you want to improve confidence, you have to deal with the root problem - inflation. And printing more money will do little to restore long-term confidence in the dollar. Rather, it's going to exacerbate the problem.

The real answer is to return to a commodity-backed currency (gold or other metals could do the trick)... and leave our fiat currency on the trash heap of history.

Tim White