Why bailouts don’t work and matter
By JR Hoeft | Saturday, January 10th, 2009 | PolicyGuest post by Terri Kurowski
We’ve been lied to, Big Time.
The definition of insanity is doing the same thing over and over and expecting different results.
We’ve already had several bailouts and a stimulus package and in fact, things have gotten worse, not better. I heard on the morning news that one of the Big Banks is in trouble again despite a big cash infusion courtesy of We The Taxedtodeath. Great. The solution will likely be to give it even more money.
We can sit around and point fingers at the Republicans, the Democrats, George Bush, Obama, Barney Frank, Fannie and Freddie, Congress, Stupid People Who Bought McMansions on a McDonalds Salary, Stupid Lenders, Overly Aggressive Realtors Who Forced People to Buy Homes They Couldn’t Afford (I especially like that one), Unions, and the Media for talking down the economy (my second favorite); they all share blame, but the facts are this:
1. Central planning does not work, just ask the USSR. And it doesn’t matter if the Rs or Ds are doing it. Right is right; wrong is wrong.
2. Government intervention in the free market (not that we really have one in the first place) mucks things up–it’s the Law of Unintended Consequences in action.
3. Thomas Jefferson was right:
“I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.”
4. The economy is too vast and unwieldy for Helicopter Ben Bernanke and King Henry Paulson to control. The economy is going to correct itself (or collapse) no matter what, unless the fed.gov stops spending and stops printing money. All this intervention is only going to either make matters worse, prolong the agony or both. Heaven help us all if/when the Chinese, Saudis, et. al. decide that the US is too risky to invest in any more. See Zimbabwe or Iceland for further information.
5. Government IS the problem, NOT the solution, and it doesn’t matter what political stripe is responsible, even Bigger Government creates Even Bigger Problems.
6. Monetary policy is intimately tied to the health of our economy and our unsound monetary policy has been creating the boom/bust cycles which seem to get worse with each new bubble. Monetary policy based on debt is not sound, nor does it build true wealth. It builds a house of cards. Further, this monetary policy disproportionately affects the poor and middle class, those on a fixed-income and those who save through hidden taxation, often dubbed the inflation tax; by devaluing the value of our dollars.
I am no formally trained economist; far from it. But common sense tells me that whether it’s a family of 4 or a government entity, you simply can’t spend your way out of debt. If you could, then the logic would be that we should all go out and get unlimited credit cards and spend, spend, spend. Sounds like fun but that’s insane!
I have come to the conclusion that the Keynesian theory of economics, which is still being worshiped in the halls of DC is wrong and the Austrian theory is correct. Those economists who ascribe to the Austrian theory have been predicting this mess and trying to sound the alarm for years. No one inside the beltway has listened. It’s high time we educate ourselves and spread the word.
If you’re not familiar with this line of thinking, here’s some “light” reading for you:
http://www.europac.net/externalframeset.asp?from=home&id=15036
http://online.wsj.com/article/SB122973431525523215.html
http://jbs.org/index.php/component/content/article/974-userblogs/4307
http://www.peacefreedomprosperity.com/?p=337
http://fee.org/articles/tgif/inflation-as-income-distribution/#more-3532
http://www.chaostan.com/bulletin-010809.html
Terri Kurowski’s 5 Point Plan for getting us out of this economic mess:
1. No more bailouts or stimulus packages
2. Drastic, and I mean huge, enormous, drastic spending cuts at all levels of government (it is a sad fact that governments are the only ones hiring these days—something is seriously wrong with that picture)
3. Drastic, across the board tax cuts
4. Get the government the hell out of the way of creative and industrious Americans, revisit and revise stupid regulatory laws
5. Return to sound monetary policy
And for you Republicans out there, Haley Barbour almost gets it right.
Freedom, Peace and Prosperity,
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About the author
Conservative to the core; liberal with his opinion! J.R. has been involved in politics for over a decade and has worked on several campaigns in Hampton Roads. He has served on the Executive Committee of the Republican Party of Chesapeake and the Central Committee of the Republican Party of Virginia. He is also the director of “Blogs United” in Virginia. E-mail J.R.. Follow J.R. on Twitter.
Comments
11 Responses to "Why bailouts don’t work and matter"
Brilliant stuff Terri! I’m very happy to see something like this posted here.
Nice job.
Reading this right after reading Randy Forbe’s thoughts on our economic plight and continual bailouts, it has become a dare to hope we can work ourselves out of this mess.
I just hope enough people “get it”.
Thanks to BD for this guest post.
is it a lie if everyone believes it?
when certain politicians did talk about the dangers of our monetary system spoke up, they were laughed at and ridiculed. no one is laughing now.
it wasn’t so much that the politicians in DC didn’t listen. they are cowards. they didn’t want the failure to happen “on their watch”. so they extended the problem a little longer with a band-aid all the while making the problem worse.
Britt, you’re too kind. But honestly, isn’t this just common sense?
I’m no doctor either but if someone has a gushing artery, the first order of business is to staunch the bleeding, not to hook the patient up to multiple blood transfusions.
Plain ‘ol Americans are intuitively doing just that; tightening their belts in their homes and businesses. Somehow, governments are exempt from doing the same in tough times?
I can’t get over the fact that so few in government are talking about serious, massive spending cuts. And that republicans in congress are bickering over the amount of the next go round of give-aways, rather than digging in their heels and saying, “NO! THE END! NO MORE!”
Who needs to worry about terrorist attacks when our own elected officials are effectively engineering the demise of our great country? It’s insane, and downright treasonous!
I hate to be an ass, but I have been saying all of this and more since I started posting on here and most everyone said I was crazy and or wrong.
Fractional Reserve Banking is evil, we need a social/national credit system like the one devised by CH Douglas
Oh, and if you think there is no such thing as the NWO or the Illuminati you are vastly mistaken. I could draw you a picture in 5 minutes that explains what the Illuminati is and how it controls the world. Its a pyramid pie scheme, the outside layers fight each other while the inner ones work together on varying degrees.
What has actually occurred with these bailouts and the economic crisis? The experts say the American public made more debt than they can pay back. Yet governments at all levels have been doing the same thing, and are now in overdrive to place even more of the economy in debt.
But what is debt really? It’s not the little pieces of paper people trade back and forth, it’s time. When a person goes into debt, they are signing over hours of their life. They are placing their ability to work at ever greater levels into hock. People expect greater value of their time through pay raises, promotions, and investments. Upward Mobility, Living the American Dream.
Then the rules change. Instead of a gold watch, they get a kick out the door. Lifelong employment becomes a constant quest to burnish the resume for the next employer. Skill set achievement is a free asset for the boss, but an expensive liability for the employee as they maneuver through a globalized job market. Retirement based on growth and productivity is traded for inflexible self-paid schemes subject to Wall Street manipulation. Yet people are supposed to be savvy enough to predict their own future. Chastised when they take on more debt than they can pay back.
Today, the experts are pointing fingers in every direction. No one could have predicted this, they say. Their crystal ball and computer models are useless. The government is now the consumer, buying nothing, but sticking an already overburdened populus with the bill. Randy Forbes equates the situation as lions attacking the savanna herd, but that scenario is wrong. There is no ability to flee this predator. Instead, Americans are huddling in their overpriced caves, with no means to keep the wolf pack at bay. One by one they succumb to threats that were bred out of the economic natural selection process by the gods of monetary policy. But it’s ok. We can spend our way out of this mess. All that’s needed are a few more generations working off IOUs. Sacrificial lambs on the altar of greed.
In the New World, time is not money. Money is Time.
News flash people, in a fractional reserve banking system money=debt. 97% of money is created out of debt, meaning 97% of all money is owed back to a bank. But wait, when you take interest into account there is always more money owed than is in existence.This means two things;
1. Our monetary system is inherently inflationary because more money is always needed to cover the debt
2. Bankruptcies, depressions, and foreclosures are all built into the system
When do we get to the gold coins? I love gold. Preciousssssss.
There were several statesman who tried to warn of this enpending crisis, including Ron Paul. The beuracrats in Washington refused to listen. They still were following the old Keynsian economic system. Keynsian economics helped contribute to this crisis. Government has spent years spending money that it does not have. The GOP has an opportunity here to rise to the occasion and offer an alternative to Obama’s “rescue plan.”The American people will soon see that Obama’s stimulus package as it stands is simply a bailout on steriods.
MB, I would have gotten you a gold coin but they are illegal
http://www.libertydollar.org/ld/ronpauldollar
Nice job Terri.
Gold Standard = paper money is tied to actual wealth, not B.S.
The Great Depression was found to have been caused by the dumb practice of allowing stocks to be “bought” using “margins” (phantom money), then used as face value as if they were real assets/wealth.
President Clinton removed the safeguards put in place after the great Depression – gee, here we are again with subprime mortgages, people allowed to “buy” homes they cannot afford without any real meaningful downpayements (real wealth invested), and the Banks and Wall Street types looking to take real wealth out of the “system” without actually adding any value in return (its also called “skimming”) bundled up thes risky loans and sold them to other banks using their bogus “face value”.
These bad loans were allowed to be “carried” on the “the books” as is they were real “assets” and used to trick foriegn lenders into loaning American banks more real money in exchange for electonic “paper” that appeared to be woth a whole lot more on its “face value” then it really was.
Why … did we learn nothing from the Great Depression?
When you are in a deep hole, the first thing you do is to stop digging.
What does our government leadership do?
They decide to INCREASE our debt while the FEDs prints more money that is not backed by the Gold Standard!
Republicans and Democrats did this – because those two “parties” were bought off by the Banks and other greedy business lobbies – we need a new political party in the United States that can clean house and stop the destruction of what is left of our nation.
I encourage everyone to consider joining the Libertarian Party.
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