Topic: Federal Reserve Bailout
Tarp, Tarp Me Do! Where is the money, what is it doing for us, and will it help?by Mister MandM
(libertarian)
Tuesday, March 3, 2009
Tarp, Tarp Me Do!
Ever wonder where the TARP money doled out by the Treasury is? It seems many have been asking but still nobody's officially saying or showing any accounting! Well now it seems some resourceful journalists are finally finding some facts.
I recently read an article in the New York Times that bears light on what a "little" 144 year old bank in Michigan is doing with their $72 million dollar injection out of the $700 billion the Federal Reserve printed to save us. Instead of loaning it, this bank has been using it to, and I paraphrase, "shore up its own weak finances by repaying short term loans from the Federal Reserve'. Now that's just beautiful isn't it! And that's quite a contrast from the intent of the bailout to free up lending and jumpstart our frozen economy.
I'll bet it turns out that all of that TARP money is being used for similar purposes and none is being used as intended or being loaned at all. By the way, who is doing an accounting of all this? Like the swift fingers of a riffing guitarist, our leaders really have their fingers on the root of the issue don't they!
This article is a good example of just how bright the rock stars at the Federal Reserve and Treasury Department really are! Remember a few weeks ago when all of the "experts" in government together were touting the answer by singing in chorus that new favorite called "Get Those Toxic Assets Off Balance Sheets" and free up lending? It's gotten big playtime from the journalists and media talking heads while flying to the top of the charts of the "Government is the Answer 100" Well apparently they were just "jamming" to a favorite melody we know very well and ad-libbing with new words a song they titled "Fiat Money Can Buy You Love".
It's not working yet but they keep saying just give it time! Apparently they are optimistic enough by the success of that strategy so far that the Producers now have confidently written a new and bigger hit titled "The Barack Obama Great American Recovery & Reinvestment Act" and throw another trillion or so out there to promote it. They seem sure that this is the right strategy for regaining prosperity and save themselves, errus! Essentially, this only means that Ben Bernanke will be trading in his helicopter for a 747 with more capacity Up, up and throw it away comes to mind!
Well, have you been following the markets lately? If so it's apparent and a fact that every time, seems all the time recently, our newer really big government throws more of our future at the problem the "still somewhat" free market contracts further. It kind of reminds me of another old favorite the people have been thinking about for too long now "Does Anyone Really Believe That Anybody in Control Has a Clue What To Do?" I don't remember the melody but the fact is this is a problem that they really don't or perhaps can't really understand!
Now I'm no economist nor have I ever tried to pretend to be, but I've been really concerned lately about what they are doing and why the economy is suffering so that I've done a little research of my own. After all, some of that money is mine and my grandkids! I've read plenty lately on how we got into this mess and refreshed myself on a little economic theory. There are many opinions out there and from what I've read there are answers too that make sense.
The conclusion that I've come to is to allow a FREE MARKET ECONOMY to work! Unfortunately our government isn't going along with that. In fact, as I've written above, their solution is to apply more intervention and take us further from what a truly free market is. I'm not well versed enough in economics to go into any explanation here but there are some out there, Ron Paul and economist Peter Schiff come to mind, that have written clearly and in a straightforward manner about this and have helped me to formulate that conclusion.
A big part of the problem is our balance of trade deficit that compounds the huge budget deficits we are creating at accelerating levels. We have been borrowing from other countries (selling debt) to maintain and keep our prosperity going. Now to continue being able to borrow the government must appear creditworthy and show productivity enough and the ability to repay those debts. Well, just like our banks are now feeling about making loans (with their own money or ours) to potential un-creditworthy people or businesses, they won't lend because of that worry. Our government is now starting to be perceived by it's creditors in a very similar manner.
At some point if the debt we've issued as collateral were called in, we wouldn't have the ability to cover it. This would result essentially in a "run on the bank" of the US Treasury and precipitate a flood of US dollars hitting the market all at once resulting in hyperinflation and less value for the dollar! Essentially the US Government would be bankrupt and have to start over.
In a truly free market these types of trade imbalances and deficits could never happen. The markets would at some point not accept that much debt without collateral and clearance and cleanse itself of that economic inefficiency. In short a company or country, whichever it is, in that situation would simply be bankrupt, broken apart and absorbed by other entities or simply just go away!
I know that this is an incomplete and simplistic explanation but the point is that we function as a constitutional republic. Our government was designed by our founders to operate in free markets with limited or no government intervention. Historically strategies of intervention and deficit financing to the extreme that our leaders are employing now have always resulted in damage to our economy.
Unlike what the current powers that be would like to think, big government getting bigger and printing more money is business as usual and not the answer but the reason we are in this mess in the first place. And mandating government controlled infrastructure projects to create the jobs that accommodate them is certainly not stimulus and will ultimately compound the problem.
We need to cut taxes on individuals and companies and more importantly, shrink government big time right now! This is the only way to truly stimulate the economy and will at least afford us a chance to save ourselves from this disaster. The current and newly proposed interventionism and economic policies that our government is planning to impose upon us and the economy now will only lead to a new economic Dark Age.
Michael Murphy, Costa Rica and San Diego
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