Economic Mumbo Jumbo

I have been trying very hard to make some sense of the Economic Bail Out that is currently working its way through the bowls of the Congress and I think that I may finally have it. It is crazily simple in its complexity and I hesitate to say that I understand it because, if I am right, it makes almost no sense. It is so nutty that it just might work.

All of this debt that banks and mortgage firms built up over the last few years is crippling them and in some cases, driving them clear out of business. What the Feds are proposing is that they (we, the taxpayer/citizens) will buy up all of these mortgages and mortgage based securities on the premise that they will indeed be valuable again one day. It seems even the banks that are being crushed by this dept believe that. The problem is, none of them have enough money to absorb the losses and remain in business long enough for the value to return. That's where we come in, with the dump truck full of money.
The Federal Reserve buys up all of mortgages and debts at rock bottom prices, and for good measure, loans themselves the money to do it. Thus they become both debtor and creditor and can allow themselves to slide on the payments. In the meantime, they collect money from all the good mortgages and any payouts from the securities. After some time passes, those mortgages and securities will become somewhat valuable again as the bad loans are weeded out. At that point the Fed begins selling them off to the banks again, but at a profit.
That is the plan as best I can piece together. My big fear here is that if enough people see the mirrors through the smoke they will realize that the whole system is built on deception. If that happens, all bets are off and everyone begins investing in beads and shells.