Posted by
Andrews on Thursday, January 29, 2009 12:53:18 PM
Many have argued that the bailout is not focused on particular trouble spots in the economy, or that it is mostly pork, or even that the money won't be disbursed until too late. However, that misses the point of the bailout. Congress may really believe the bailout is intended to work as a stimulus through the money spent, but I have a feeling the motive of the monetarist and Keynesian policy wonks who developed it is quite different. Either they are die hard Keynesians and think we need more deficit spending to cure unemployment and economic sluggishness, regardless of where the money is spent, or they are monetarists who understand that the $850 billion in inflation it will create will buoy the economy for a few months or years and push the collapse down the road until afetr the next election. In either case, I doubt they care HOW the money is spent, just that the government spend the money, and do so through borrowing covered by open market operations, that is, inflation.
Of course I may be wrong, maybe no one behind the bailout understands that and all really dot hink somehow creating money out of nothing and then tossing it willy nilly at the economy is the best solution possible. But if so, that is even more frightening. At least my first theory had some degree of economic understanding behind it. If they truly believe what they are saying abotut eh bailout, then I really fear for our nation.