The question is, with recommended promises of further ‘help’ from legislators looming immediately after the Jewish holidays, how long will the American people be able to stave off their socialist representatives in Congress, the White House, the Fed, and the Treasury? The media, including FoxNews, are nearly 100 percent bad on this as well. And do we really believe that the taxpayers who will foot this socialist bill will individually be recompensed? Come on.
The Federal Reserve, responsible for all of the ‘injection effects’ that caused the economic and mortgage boom in the first place (and by the way masked any real gains from productivity and technology in the tidal wave of money they have flooded into the American and international markets), is first and foremost responsible for the mess.
The Fed does not create prosperity by creating money and credit. Money and credit, as the author of the above linked Wall Street Journal article correctly notes, stand in the center, as an intermediary good in every exchange, but they are not neutral intermediaries. New credit goes to particular individuals and enterprises?the injection analogy?and when they are withdrawn or even tapered off, especially when they have been too risky and unwarranted in the first place, are necessarily painful and unpleasant.
No addict can withdraw without suffering during withdrawal; the Fed has allowed, and Congress has insisted, that credit markets extend and expand their reach to risky credit consumers (mostly in the form of home mortgage loans), with the certainty that there must be a stopping point. The longer the credit addiction, the larger the number of banks and the bigger the volume of bad debt.
One might reasonably ask why, if it’s a certainty that excessive credit creation precipitates the severe contraction needed to clear out the bad debt and unwise investments, we don’t simply outsmart the process and not get suckered in. Riding the up-wave can be fabulous, as long as you gauge the turning point. What the Fed has done?in full concert with the socialist and economic engineers in Congress?has been to create the tidal wave and urge everyone to get aboard. They’ve ‘done their job’ of promoting employment and home ownership, and can claim plausible deniability for the devastation once that wave crests and starts crashing into reality.
So, thanks to the freedom-loving sense of the American taxpayers, who flooded their representatives with a rejection of socialist proposals, we haven’t yet crippled the economy for the future. Markets will rebound as long as Congress and the Fed don’t get hold of them.
Freedom is on the run–from the very institutions and representatives that claim to be their guardians and champions, unfortunately.
