Good news: Fed pumps another $1 trillion into economy
posted at 9:30 pm on March 18, 2009 by Allahpundit
I was confused when I saw the headline. Was this the same $1 trillion Michelle blogged about this morning? No, it turns out: That was $1.5 trillion for health care plus $2 trillion to fight climate change, both estimated expenses over the next decade. This $1 trillion is to cash out mortgage-backed securities and long-term Treasuries.
It’s important to keep your trillions straight.
As expected, the Fed kept its benchmark interest rate virtually at zero. But in a surprise, it drastically increased the amount of money it will create out of thin air to thaw out the still-frozen credit markets that have cramped lending to consumers and businesses alike.
The Fed said it would purchase an additional $750 billion worth of government-guaranteed mortgage-backed securities, on top of the $500 billion that it is currently in the process of buying. In addition, the Fed said it would buy up to $300 billion worth of longer-term Treasury securities over the next six months. That would tend to push down longer-term interest rates on loans of all types.
All of these measures would come in addition to what has already been an unprecedented expansion of lending by the Fed. Since last September, the central bank has roughly doubled the size of its balance sheet to nearly $2 trillion from $900 billion — even before the action Wednesday — mainly because of its efforts to rescue credit markets…
Starting last September, the new lending programs — including money for bailouts of individual companies like Citigroup, American International Group and Bank of America — have caused the Fed to print new money at the fastest pace in history. But much of that money has remained dormant, because the economic downturn has made banks reluctant to lend and businesses and consumers either reluctant or unable to borrow.
Below you’ll find some completely unrelated viewing. Exit question for amateur (and non-amateur) economists: What’s the bigger risk, deflation or inflation?
Blowback
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Allah,
Be sure and let me know when we hit a gazillion!
Rovin on March 18, 2009 at 9:31 PM
Don’t forget the 50 to 60 trillion needed for Social Security & Medicare by the time the Baby Boomers finish retiring.
gmoonster on March 18, 2009 at 9:31 PM
I think Peter Schiff just had a heart attack.
Mark1971 on March 18, 2009 at 9:33 PM
Guess that Stimulus was a total waste afterall.
Chuck Schick on March 18, 2009 at 9:33 PM
Gold is up over 4% right now. Actually all commodities are going to do well.
Weight of Glory on March 18, 2009 at 9:33 PM
Where the hell is all this money coming from…?
NeoKong on March 18, 2009 at 9:34 PM
Where did Bernanke get his money tree? I want one too.
Mark1971 on March 18, 2009 at 9:34 PM
Check you wallet lately?
Ted Torgerson on March 18, 2009 at 9:34 PM
Supposedly, they thing that the recession will keep inflation in check… which begs the question: just how badly are these guys counting on a horrible, prolonged recession or worse?
DaveS on March 18, 2009 at 9:35 PM
“Where the hell is all this money coming from…?”
The short answer…..printing presses. Getting money is a snap when you only study law at Harvard. Economics is for geeks.
GarandFan on March 18, 2009 at 9:36 PM
Lord help us, glad I saved all that Confederate money my great great grandpappy passed down to me. Looks like I’m gonna need it. I’m paying my mortgage off in July also, hopefully my dollars will still be worth something. A big shout out to all the friggin’ MORONS that voted for this whole hopeychangy feel good thing from the child of the teleprompter, I hope you all reap it.
GlocknRoll on March 18, 2009 at 9:37 PM
They might want inflation. It would reduce the huge debt the government is running up.
Mark1971 on March 18, 2009 at 9:37 PM
QOTD
blatantblue on March 18, 2009 at 9:37 PM
Dumb move.
therightwinger on March 18, 2009 at 9:37 PM
Wow!!!
If it is that easy,what have we all been so worried about?
Problem solved, now we can get back to more important issues like Rush Limbaugh.
Baxter Greene on March 18, 2009 at 9:37 PM
On the bright side, Zimbabwe’s $100 trillion dollar notes are auctioning for like $2 US on ebay … so we’ve got that going for us.
progressoverpeace on March 18, 2009 at 9:37 PM
A good chunk of this new money is going to go into commodities like oil (and gold). So, it’s inflationary.
blue13326 on March 18, 2009 at 9:38 PM
Yeah, no, don’t worry about hyperinflation. I’m sure things will be fine.
amerpundit on March 18, 2009 at 9:39 PM
Okay I’m all out of ideas. I’d say buy gold but at the rate they’re printing money and breaking basically any and every law, there’s no guarantee they won’t just steal all the gold like FDR did…
Question: Even if we win in 2010 and 2012, how can we stop all this?
John_Locke on March 18, 2009 at 9:39 PM
If creating money out of thin air will fix things, then I say they should just make a googolplex dollars and be done with it.
TheQuestion on March 18, 2009 at 9:41 PM
Like one Republican congressman said on Hannity, by repealing large aspects of the stimulus. From what I understand, much of it won’t be spent by 2010.
The other route will have to be a massive cut in spending. The country seems to still be on the track for major inflation.
amerpundit on March 18, 2009 at 9:43 PM
… or a President who doesn’t know how to deal with either?
Glenn Jericho on March 18, 2009 at 9:43 PM
Is this the same Fed that Liddy informed at the hearings today that he may have to pay 165 million (chump change), to some executives at AIG for services rendered? I really didn’t know that Bernanke was authorized to print money.
Rovin on March 18, 2009 at 9:43 PM
Deflation short-term. Inflation long-term. The deflation is happening because the whole economy is seizing up, with everybody holding onto cash. Once things even start to thaw again, you’ll have all this money in the system and the inflation will start. The problem is that it’s virtually impossible to pull that money out of the economy at a fast enough rate. The Fed tends to look into a rear-view mirror and by the time it gets the signal that it’s time to react, it will be too late. The inflation will have started in earnest.
Summary: we’re f*cked. Buy gold.
PersonalLiberty on March 18, 2009 at 9:44 PM
Right here
uncivilized on March 18, 2009 at 9:44 PM
Question: Even if we win in 2010 and 2012, how can we stop all this?
Have your musket scoured, 60 rounds of powder and ball, and be ready to march at a moments notice!
Major Robert Rogers, founder of the Rangers, 1776!
Revolution, throw all these bums out, both sides of the aisle and then we rebuild from the ground up with the constitution and bill of rights as our guide.
GlocknRoll on March 18, 2009 at 9:44 PM
Oh, don’t worry, he has COMPLETE confidence in Geithner!! We’re saved!!
Inflation, here we come!
SassyDarlin on March 18, 2009 at 9:46 PM
I’ll bet the Chinese are going to be real happy after Hillary asked them to buy more bonds (overlooking Chinese human rights violations as she did it), and those bonds will be repaid with inflated dollars.
When the Chinese stop buying, the One will have a real problem (“Taiwan? Take it, it’s yours, anyway.”).
Wethal on March 18, 2009 at 9:47 PM
I don’t know if you are asking this question in general, as in “which is more dangerous?”, or with reference to this move (which is one-way inflationary) … but the answer to the general question is impossible to answer. Each of inflation and deflation carry their own kinds of risks. It’s really a question of a large instability in the currency, in either direction. One kills economic activity, but safeguards the currency while the other enhances economic activity, while risking the life of the currency. Take your pick. Either is fine in small-medium amounts. Both are susceptible to feedback and asymptotic behavior, which is what really needs to be avoided.
progressoverpeace on March 18, 2009 at 9:50 PM
Pfffft. Don’t wake me until we’ve hit a Brazilian.
Daggett on March 18, 2009 at 9:51 PM
The money isn’t actually being created from thin air, it’s coming from the Government Money Tree Farm located on the grounds of Area 51.
Gawd amighty…you peoples is dumb.
Bishop on March 18, 2009 at 9:52 PM
I’ve always wanted buckets full of money. Looks like my dream will come true.
How many buckets will I have to take to Starbucks now to pay for my crappuccino?
Limerick on March 18, 2009 at 9:52 PM
How much more does the Fed have to spend before it becomes cheaper to just give every taxpayer a million bucks and we all retire?
Guardian on March 18, 2009 at 9:52 PM
Oh, don’t worry, kiddies. getalife will come in here and explain how printing 1 trillion dollars with nothing to back it up is a good thing. And how it isn’t AT ALL like the time Germany did the same thing in the 1930′s only to go further into debt and, well, you know. Something, something, Bush’s fault, something something, Dow up to around 7500, something, something, Obama’s awesome, blah, blah, blah.
As opposed to what this really means. The government pisses away money it doesn’t have like it’s going out of style. With not one reason to expect that it’s going to make a difference to the economy. ETc, etc.
mjk on March 18, 2009 at 9:54 PM
I am really looking forward to a $1 000,000,000 note with obama’s face on it.
runner on March 18, 2009 at 9:54 PM
This is so Unconstitutional I truly believe we have been invaded as a country by a hostile force………..
………. and they are doing everything in their power to destroy the United States of America.
Seven Percent Solution on March 18, 2009 at 9:54 PM
How much more does the Fed have to spend before it becomes cheaper to just give every taxpayer a million bucks and we all retire?
Guardian on March 18, 2009 at 9:52 PM
Give money back to taxpayers? What a laugh!
Bishop on March 18, 2009 at 9:55 PM
Bernacke has some incredible new color copiers at the Fed….
Wethal on March 18, 2009 at 9:55 PM
Are we going to be using wheelbarrows to transport our useless money around soon? Seriously, what the hell is wrong with these people?
mjk on March 18, 2009 at 9:55 PM
Could we go bankrupt? I mean a reorganization bankruptcy like businesses do? I really think we are getting to that point.
petunia on March 18, 2009 at 9:56 PM
http://www.youtube.com/watch?v=SNSz9ODAr9A
Peter Schiff’s new video blog, right on cue.
Mark1971 on March 18, 2009 at 9:56 PM
“This $1 trillion is to cash out mortgage-backed securities and long-term Treasuries.”
I don’t know about the mortgage backed securities, but I have this sneaking suspicion that the cash out of long-term Treasuries is because investors aren’t willing to hold them. The wife was reading today that China held $1.9T at the end of 2008 but have reduced it to $1.6T and China’s moving their holdings to commodities and long term land leases.
It seems to me that the government is on the right track though; they only have to buy another $10T or so of treasuries and they can wipe out the national debt. Yippee!
Dusty on March 18, 2009 at 9:57 PM
No sweat, our kids (and grandkids) will pick up the tab.
/Selfish baby boomer a$$f*ck
omnipotent on March 18, 2009 at 9:58 PM
It’s a damned waste of money. The problem isn’t the lack of money, it’s the damned regulations. It’s the stupid rules they’ve added that make it harder for worthy borrowers to get money. I don’t care how much they pint- if they don’t fix the restrictons it won’t matter. Do you have any idea what the origination fees are now?
Forgive me, but God damn it Obama and company are a**holes.
drjohn on March 18, 2009 at 10:00 PM
The 10,000,000,000 bill will have a picture of Obama’s teleprompter on it.
Mike Honcho on March 18, 2009 at 10:01 PM
What are the odds that we’d be able to repeal any of it? Because I’m looking at the odds of us cutting spending as the same odds of hell freezing over.
John_Locke on March 18, 2009 at 10:05 PM
Inflation? Jim Rogers summed this up best…
Jim Rogers: Government Creating an Inflationary Holocaust (Video) (7min)
Poptech on March 18, 2009 at 10:09 PM
Increasing the money like this is only going to create inflation. In another example of Obama paralleling Jimmy Carter, we’re going to see inflation with a simultaneous increase in joblessness. The solution the first time around was to elect Ronald Reagan. I wonder what’s going to happen this time.
suburbanite on March 18, 2009 at 10:11 PM
Well now, that may actually be reasonable as we may well be headed into a pronounced cooling period and we may well need something to heat things up.
MB4 on March 18, 2009 at 10:12 PM
I hope these new dollars have the hopeychangey Obama stamp on them so we will know who to thank as we push our wheelbarrels full of them to the store to buy a loaf of bread…
canditaylor68 on March 18, 2009 at 10:12 PM
I’m betting on that. Make a dollar worth a penny, the debt becomes manageable and the Chinese are screwed.
I still think that if 1 trill is equal to 90% of all the mortgages in the USA, they should pay 90% of everyone’s mortgage with the stipulation that if you take the cash, and sell before the life of the loan (say 23 years left) the Government gets 90% of your profit.
It does the same thing without the ridiculous risks being taken.
TinMan13 on March 18, 2009 at 10:13 PM
Hey, I have a Monopoly game in the cabinet. I also have a LIFE game with hundred thousand dollar bills.
Can I start using some of the money in there?
fossten on March 18, 2009 at 10:13 PM
I read an intersting article or blog today that says the master plan is inflation.
It’s really hard to pin the blame for inflation on anybody, and the effects can be even more insidious than taxes.
It’s the way the Communists destroyed capitalism in Russia.
Who would know better than Obama and his puppet-masters.
notagool on March 18, 2009 at 10:14 PM
Quoted interest rate = real interest rate + credit risk premium + inflation risk premium.
So, if the Fed is printing an additional $1T, the inflation risk premium should bump up all dollar-denominated interest rates — not send them lower.
And when currency is dumped into an economy without extra value to show for it, that’s pretty much the definition of inflation.
cthulhu on March 18, 2009 at 10:15 PM
No problem . . . Obama will pontificate on a mindless late night talk show tomorrow night and that should fix everything.
rplat on March 18, 2009 at 10:15 PM
I see him standing in the rain
Raindrops falling on him
He doesn’t even seem to care
He just stands there and smiles as if just at me
And I know
(I know, I know, I know, I know)
He will make me rich and happy
(rich, rich, happy, happy).
Trillions in his hair
Trillions everywhere
I love the Money Man
Oh, I don´t know just why
His Hope and Change simply catches my eye
I love the Money Man
He seems so generous and kind
He sweeps thoughts of $$$$$$$$$$ into my mind
I know I have to say bravo
(bravo, bravo)
He smiles over at me
It’s as if he takes me by the hand
And we walk
To break the bank alone
And I know
(I know, I know, I know, I know)
He will make me rich and happy
(rich, rich, happy, happy).
Trillions in his hair
Trillions everywhere
MB4 on March 18, 2009 at 10:15 PM
Here I was all worried about Obama and the biggest threat to the world is the Fed! Impeach Ben Bernanke. Remember back in Aug. of 2007 when those 2 hedge funds blew up? Bernanke testified that it was ‘contained’ and that total losses would be 100-500 billion? This guy needs to go.
SocratesShadow on March 18, 2009 at 10:17 PM
OT…..I HATE WHAT’S GOING ON IN WITH MY DENVER BRONCOS!!!!!! Sorry, I’m watching NFL network and as if the country going to hell in a handbasket wasn’t bad enough, now I’ve got to deal with the possibility of no Cutler next year. I’m this close to giving up.
Weight of Glory on March 18, 2009 at 10:17 PM
So this probably explains why the Gold Index went up 9.16% today.
MB4 on March 18, 2009 at 10:20 PM
A trillion here, a trillion there, pretty soon you are talking about real money.
Maxx on March 18, 2009 at 10:23 PM
Gold Index up 9.16%, 10 year T-note down 15.65%
MB4 on March 18, 2009 at 10:24 PM
But look on the bright side, Eric Holder wants to release his good friends at Gitmo in America:
“For those who are in that second category, who can be released, there are a variety of options that we have. Among them is the possibility that we could release them into this country,” he said.
“We’ve been trying to come up with places for them,” Holder said of the Uighurs. Their lawyers have asked Obama to bring them to the United States.
http://news.yahoo.com/s/nm/20090318/us_nm/us_guantanamo_holder
Kalapana on March 18, 2009 at 10:24 PM
rplat,
:)
I was just thinking, “who is doing the Presidential stuff while Obama’s sclepping around America, campaigning?” Then I thought, I’ll bet it’s “Nobody messes with Joe” Biden and instantly had a massive stroke.
mjk on March 18, 2009 at 10:25 PM
Stagflation!
Tzetzes on March 18, 2009 at 10:26 PM
*schlepping
mjk on March 18, 2009 at 10:26 PM
I’d wait if I was you, probably in the not too distant future your Monopoly money will be worth more than the ones in your wallet.
Good to see you back fossten, haven’t seen you in a while.
Maxx on March 18, 2009 at 10:26 PM
Not being a financial genius I will quote a poster at a financial website who thought Bernanke may have gotten it right about buying mortgage backed securities
“The reason they are comfortable with this scenario is that they’ve seen about 80% of all the liquidity they’ve put into the market over the last six months end right back on deposit at the Fed.
Once the Fed sees the excess reserves being taken up by the economy they can begin to to shrink the balance sheet by selling out the bonds (and pushing rates higher in the process, restraining inflation).
Japan employed “quantitative ease” earlier this decade and had no nasty rebound in inflation.”
I would add that 2/3 rds of inflation is due to wages making Obamas union payoffs via Card Check just as dangerous.
jjshaka on March 18, 2009 at 10:27 PM
or Bankruptcy…
Time to learn to speak Chinese?
TN Mom on March 18, 2009 at 10:25 PM
TN Mom on March 18, 2009 at 10:27 PM
We won’t need to worry about climate change. At the rate we are going – all the factories will close – all the power plants will shut down – we will run out of gas – we won’t be able to drive. Climate change solved.
izoneguy on March 18, 2009 at 10:27 PM
I told a guy at my dance class that was what was coming up next and he told me I was ultra-paranoid. Yeah, guess who wins that one?
And the part about Russia re-arming. And the part about the financial situation getting worse. And the part about Obama giving billions of dollars to the Hamas.
He’s 0 for 4 so far. And I should go into fortune telling.
mjk on March 18, 2009 at 10:29 PM
Inflation will make my student loans easier to pay off (assuming I can find a job). Sorry, grandma!
Tzetzes on March 18, 2009 at 10:30 PM
I really hate that man. I can’t even put it into words.
SouthernGent on March 18, 2009 at 10:31 PM
Inflation is the doomsday scenario. With inflation, whatever money you have, becomes worthless. During the Great Depression, you could get by with saving what little money you earned. Every dollar bought a lot. The fundamentals were sound. The dollar meant something. It was just difficult to find work for 25% of the population.
With hyperinflation, brought on by using printing presses like they did in the Wiemar Republic, even if you get work, it doesn’t help. The money you are paid is worthless. What’s worse, if your currency is worthless, you can’t sell IOUs to other countries to even borrow money. Those IOUs are called bonds. For decades, America has been making ends meet by selling these bonds. It doesn’t collect enough in taxes to even come close to making ends meet. Once they can no longer do that, everybody starves. The country sinks into anarchy because government can no longer pay for the services to run a nation – like the police, the water and sewage systems, the electrical grid and so on.
Ever see Mad Max/The Road Warrior? People didn’t fight for jobs, or money, or gold. They fought for gasoline.
keep the change on March 18, 2009 at 10:33 PM
Just to be safe gringos and soon to be coolies for the Chinese better for you to both aprenda el espanol and 学会中文.
VinyFoxy on March 18, 2009 at 10:41 PM
Deflation is not a risk! Deflation means the dollars you earn and have saved have more purchasing power. To put it simply the economic illiterates screaming about the dangers of “deflation” are literally complaining that you are able to buy things cheaper. Yes it is that simple. In a recession, one of the benefits are cheaper prices for various reasons. The Federal Reserve is going to inflate prices by creating money out of thin air and make it MORE EXPENSIVE for you to live. All while telling you that deflation is dangerous. Absolute insanity.
Falling Prices Are the Antidote to Deflation (George Reisman, Ph.D. Professor Emeritus of Economics)
Poptech on March 18, 2009 at 10:41 PM
That’s Obama’s game plan, too. It’s always the choice of politicians to spend now and pay it off with inflated dollars later. But this goes beyond reason. This is terrible.
Yep, I hate them too. Just hate them.
PattyJ on March 18, 2009 at 10:47 PM
By the way…………..
………. do you all realize that the home you thought you owned has been given up as collateral by the Teleprompter to the Chinese.
When you get a knock on the door in the middle of the night telling you to get out by a Chinese soldier with an AK47………
Don’t be surprised.
Other than that……….
………… have a nice day.
Seven Percent Solution on March 18, 2009 at 10:47 PM
One trillion Two trillion Three trillion Four
America is in debt for lot many years more
Who is out there keeping the score?
Those were the good days November O Eight before
Going to work is now a big chore
Why buy supplies when they are free at the government store
This is still a great land of bravery and folklore
Let us be brave and take the country back – THAT we can not ignore
OneConservative on March 18, 2009 at 10:49 PM
The middle class is going to be scomed, and they won’t take it. Why should they?
Entelechy on March 18, 2009 at 10:53 PM
Well, the middle class will be scroomed.
Entelechy on March 18, 2009 at 10:54 PM
It might be useful to post Stephen Moore’s brief history of 70s Stagflation; pretty clear that is where we are headed.
james23 on March 18, 2009 at 10:54 PM
LOL…. sorry bud, now you know how us long time RAIDER fans have felt the last few years…
Did Al somehow get control of yer team?
Anyway…. they don’t even print the money anymore, its just binary bits sitting in a computer…. or… at the hardware level, high and low voltage states…
Hmmm…. does that make it Constitutional? Cause they are bit actualy coining money… or….
Should these powers of Congress be in effect, as the Fed Res is NOT Congress, and is creating money, thus it is counterfeiting?
Romeo13 on March 18, 2009 at 10:56 PM
Told ya the AIG thing was a distraction.
I am more right than rush.
getalife on March 18, 2009 at 11:11 PM
There was a dream, a dying ember
There was a dream, I don’t remember
But I will resurrect that dream
Though rivers stream and hills grow steeper
For here in hell where life gets cheaper
Oh, here in hell the blood runs deeper
And when the final duel is near
I’ll lift my spear and fly
Piercing into the sky and higher
And the strong will thrive
Yes, the weak will cower while the fittest will survive
If we wait for the darkest hour
Till we spring alive
Then with claws of fire, we will devour like a falcon in the dive
PercyB on March 18, 2009 at 11:14 PM
The Blessings of Deflation (Ludwig Von Mises Institute)
Poptech on March 18, 2009 at 11:14 PM
John_Locke, I’ll take the odds on Hell Freezing Over First.
3 Thoughts
(1) Get your tickets for “Inflation” soon to playing in a city near you
(2) I expect a misery index far higher than I suffered through during the Carter reign of terror.
(3) This is alchemy at its best. Paint a 16 oz lead bar with 10 cents worth of Gold Leaf paint and sell it for $16000 assuming the value of Gold is $1000 per oz. This is the trick of printing money out of thin air and increasing the money supply with it.
chemman on March 18, 2009 at 11:15 PM
We will have inflation AND deflation.
Inflation on things you need…food, clothing, gas, electricity, water and taxes.
Deflation on things you don’t need…90″ plasma TVs, 6000 sq ft homes that nobody can afford to heat, cool or pay property taxes on.
angryed on March 18, 2009 at 11:20 PM
WHOA, just watched the video montage. There was a brutha at one of those rallies? Damn, is Obama even starting to lose black support?
angryed on March 18, 2009 at 11:21 PM
That is good, that’s what a beer and a burger will cost soon.
Stagflation.
Speakup on March 18, 2009 at 11:22 PM
Yep. People don’t seem to appreciate the absolute necessity for a functioning currency and how much of society actually depends on it (most especially in our just-in-time inventory oriented structure). They also seem to confuse the US dollar with other currencies that have blown up, not realizing that no one can bail us out as we, and others, have often done for the little, amateur currencies.
progressoverpeace on March 18, 2009 at 11:26 PM
O M G!!!!
We’re going to need a lot of tea to protest all this.
Yakko77 on March 18, 2009 at 11:26 PM
I’ll soon take all my troubles over to Obama Rue
You know The One with the telepropter and the never ending Hope and Change shtick
He’s got a pad down on Pennsylvania avenue
He’ll be passin’ out little bottles of Obama Potion Number Nine
I’ll tell him that I’m having trouble with my mortgage payments
It’s gotten even worse in these last few weeks
He’ll kiss me on the cheek and he’ll made a magic sign
He’ll say “What you need is Obama Potion Number Nine”
He’ll turn around and gave me a wink
He’ll say “I’m gonna have my Michelle make it up right here in the White House sink”
It’ll smell like Chicago, it’ll look like socialist printer’s ink
I’ll hold my nose, I’ll close my eyes, I’ll take a drink
I won’t know if it is day or night
I’ll start grabbin’ everyone else’s money that is in sight
But when a wheel barrel full of it won’t even buy a BigMac
It’ll break my little bottle of Obama Potion Number Nine
Obama Potion Number Nine
Obama Potion Number Nine
Obama Potion Number Nine
MB4 on March 18, 2009 at 11:26 PM
Deflation: The Biggest Myths (Jörg Guido Hülsmann, Ph.D. Professor of Economics)
“Political entrepreneurs are thus right to fear deflation. For deflation takes away the source of their illegitimate income and puts them finally back on equal footing with all other members of society, whose incomes are based on efforts and services provided in a competitive environment.
But these privileges can only survive because of widespread ignorance about the true character of deflation. A closer look reveals that the case against deflation squarely rests on a litany of inflationist myths.”
Poptech on March 18, 2009 at 11:27 PM
There’s a good reason socialists hate the middle class – it’s the only group of voters with the power and inclination to stop them, at least until they’ve been battered and marginalized enough to lose their voting power.
Obviously the lower class always finds socialism’s promises to be beguiling: “free” everything, and some faceless rich guys somewhere will pay for it! Tragically, it’s a sufficiently alluring promise to depress the number of people who try to work their way from the lower to the middle class. A number of the people climbing the ladder of success will be seduced into letting go of the rungs, and falling back into the safety net.
Of course, it doesn’t help that the very same small businesses most likely to hire the working poor are the first ones to be crushed by socialism’s failures, as we will see demonstrated over the coming year. None of those magically-conjured trillions of “stimulus” dollars are going to middle-class small businessmen, and since inventing money out of thin air produces zero actual wealth, the value of the small businessman’s dollars will inevitably decrease. Printing up a couple trillion fresh new dollar bills does not add one hour of additional productivity, or one ounce of useful goods, to the economy. It just diverts productivity and goods away from where the market would have driven them, left to its own devices.
The silent partners of the socialists are the ultra rich, who remain members of the ruling class. They gain more from reduced competition, huge costs being imposed on small businesses, and an impoverished work force that will be satisfied with less, than they lose in increased taxes – most of which they will avoid anyway. What big-bucks employer doesn’t relish the thought of shopping for labor in a buyer’s market, where double-digit unemployment produces a desperate work force, and Uncle Sam pays for most of the things a previous generation expected employers to provide?
If the growing sea of unease and unfocused anger in America today has a core, it must be the increasing realization of the middle class that Obamanomics has nothing for them. Their property has been devalued, business and personal credit are drying up, investors frightened of Obama’s incompetence and rigid ideology are withholding investment capital from the market and strangling the growth of new businesses and new products… and they can vaguely perceive the shape of the real Armageddon growing on the horizon, when Card Check destroys the labor market, insane cap-and-trade energy policies double the price of everything, socialist medicine begins reducing their quality of life, or crushing deficits bring on Carter-style stagflation.
If there’s one thing the AIG debacle brings home to the middle-class voter, it’s that people are still getting rich and powerful out there – but it isn’t going to be you, or anyone you know, or anyone who would hire you.
Doctor Zero on March 18, 2009 at 11:29 PM
Your man is sinking the ship.
Johan Klaus on March 18, 2009 at 11:31 PM
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