US Government biggest value investor?

Here's the deal, the US government has turned into the buyer of last resort with US 700 billion to 1 trillion in their briefcase. They have turned into the largest value investor, thinking buying assets on cheap. This will remove uncertainty from the market, and hoping it will recover, then they can sell at a profit. Then the US tax payers may make some money out of this, said Goldman Sachs Chief Economist Jim O'Neil. By taking aggressive steps will prevent the value to assets to continue to fall to worthless.

The proponents think this is similar to Swedish bailout. The taxpayers did make money at the end, so why not?

The opponents think since they may spend every penny that being approved to buy those toxic assets, the value of money will evaporate and eventually the Fed will have to print money - this will trigger tonnes of inflation and leading to devaluation of their currency since the deficit goes out of control.

Who is right? My bet -- opponents have higher probability to get it right. Look at this Case-Shiller 20-City index, it has not reverted to mean. It means, more to fall, the US government is trying to catch a falling knife. They are thinking with their mighty hands, they can stop the knife from falling. They are trying to manipulate market psychology -- hoping to get people to go long on housing.