Today’s pièce de résistance. . .
NRO’s eye on debt and deficits
Is the Fed Pursuing Our Interest or Banks’ Interests?
by Kevin D. Williamson
Posted on December 01, 2011 4:00 AM
The Fed signals that it intends to hitch our national wagon to Europe just as Europe is going over the edge, and the Dow jumps 4 percent. Maybe I’m missing something.
Congress should make it clear — today — that the Fed’s mandate does not extend to bailing out Europe’s banks and Europe’s governments. This is especially true after the secrecy and unaccountability with which it conducted the $7.7 trillion shadow bailout on top of TARP.
One of the big problems at MF Global (as at Lehman Bros.) was off-balance-sheet accounting, using various bookkeeping shenanigans to hide the fact that liabilities were dwarfing assets. The United States government does that both in the obvious sense — pretending that future entitlement liabilities don’t really exist — but in a more subtle sense, too: Wealth isn’t abstract numbers. Wealth is real stuff: food, oil, steel, houses, people performing useful services, etc. You can flood the world’s financial systems with liquidity and create the impression of economic activity, but that does not create one automobile, pair of shoes, or bag of coconuts. You can finesse the economic metrics, but that doesn’t make you any richer.
Government spending in the United States (at the federal, state, and local level) is about 40 percent of GDP, and we’re borrowing 40 cents of every dollar we spend. We’re spending the money now, with promises of future benefits that amount to (literally) more than all the money in the world, and promising to pay off today’s spending out of future taxes, as though the future is not going to want to spend the money on itself. That is not a program for stability. Not in Europe. Not here.
Ben Bernanke and Timothy Geithner as presciently portrayed by the Coen Brothers in the 1987 film “Raising Arizona” :
Here’s the final word from history’s foremost economics Guru & Über Mensch: