Why doesn't the US government just tell the world, all our assets are worth half now and write debt off?

Question

Subprime mortgages would be halved.

Those that have paid for their assets would be given double their value up to an amount equal to the value of a median priced home in their area, rewarded for weathering the storm as it were, except if they own way more than a median priced home!

Now you would have people with managable debt and some people who have assets they paid for in the middle class that have something to show for their diligent efforts!

This is my way of bailing out America! Obama, you listening to/reading this?

Answer 1

We are doing that, in a slightly slower way.  It's called "inflation".

We are sending a signal to the world, and it's that we have totally lost control.  Did you see today's news projecting the biggest budget deficit in the country's history?

A different signal might be if we got rid of George W Bush and the rest of the liberal borrow-and-spend Republicans and replace them with a good conservative balanced budget Democrat.  Regardless of what you think of his sexual morals, the last balanced budget was passed under Clinton.

Answer 2

You're not serious are you?

So you want the US government to tell all the world that invests in this country that the assets used to secure those funds are now worth half what we said they would and that they will just have to write those loses off.  Are you listening to yourself?  

If you put your money into an investment and they told you a few years down the road, "Hey, the value of this investment is half what we thought it was and you'll just have to right off the loss", how long would you keep that money in that investment?  Would you ever invest with those people again?  Probably not.

What you are proposing would probably destroy our economy and thats not to mention what would happen to the world economy.  We are still an economic leader in the world you know and we are in a global economy whether you like it or not.

And how is your "plan" going to take care of the sub-prime mortgage issue or raise the value of real estate for the middle class?  We live in a free market economy my friend.  Contrary to popular belief, the government has very little to do with the economy.  Sure they can promote spending or pass some regulations that are designed to spur on the economy but they can't totally control it.  If they could, they would.  Its been tried before, its called communism and it didn't work out so well for the Soviets, did it?

Now I don't agree with Obama politically but he wouldn't be stupid enough to do what you are proposing.  

Good luck to you my friend.