Libertarian candidate for U.S. Senate in North Carolina, Chris Cole, pledges "No more bailouts!" by Brian Irving
(libertarian)
Monday, September 22, 2008
Statement by Christopher Cole Libertarian Candidate for U.S. Senate
If a Wall Street investor walked up to the average American, and asked him to pick up the tab for his thousand-dollar hotel bill, that American would probably ask to share whatever that investor has been smoking. Yet, our government has done that for every man, woman, and child in America.
With the Federal buyouts of Fannie Mae, Freddie Mac, and AIG, the Republican president and Democrat Congress have transferred $3 trillion of debt from Wall Street, banks, and insurance companies to the American taxpayer. That is $1,000 for each of us (not even considering interest), on top of the $9.2 trillion "we" already owed, thanks to our government. Yet, mysteriously, that largess was never stated quite that way. I'm the only candidate with the courage to call a waddling debt a duck.
What's worse is that the transfer isn't finished. Our generous politicians are offering the credit of taxpayers to pay for bad debt piled up by our banks. Does anyone remember politicians back in 2006 running on a campaign of welfare for bankers? I pledge: Read my lips: no new buyouts!
It gets even worse. The buyout of AIG is from the Federal Reserve, not the Federal Treasury. The big open secret is that Federal Reserve checks aren't drawn on any account; they represent money created out of thin air. That means $85 billion will be added to the money supply, creating an additional ripple of inflation, a hidden tax whenever we buy groceries, pay our doctors, or buy school supplies for our children. Does anyone remember a politician telling us that? Can you hear the quacking?
In spite of the hype, there are three long term consequences to the buyouts, on top of the added debt burden: First, the inflationary effect of Federal Reserve cash infusions; Second, by preventing the bankruptcy of poorly-run corporations, the buyouts preserve non-performing assets that would have been transferred to more-efficient, self-supporting buyers. That will result in lower economic growth, slower job creation, and stunted income growth; Third, it creates a sense of security, whether realistic or not, that businesses will be rescued from the consequences of bad business decisions. This will increase risky loans and investments, not reduce them.
That is why I opposes these buyouts, as well as all forms of corporate welfare. American taxpayers should never be on the hook for the profits of businessmen.
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