Here is a letter I sent on 4/26/09 to the Business Columnist for the Houston Chronicle, Loren Steffy, because he was so deeply into the theory that government ‘stimulus’ programs and easy money would put a quick stop to the then-incipient recession. I think he is still working on that theory.
News flash: lenders are not lending because they are afraid their loans will not be repaid.
The Paulson/Geithner line, which has saved Goldman Sachs and other investment banks and is now running cover for the Obama agenda of nationalizing everything that moves, is that, if the government throws enough money at the lenders, they will decide to lend. This is referred to, among people who know better, as “pushing on a string.” There is no more chance of that kind of thing working, than there is of the “stimulus” program stimulating anything (other than the hopes of those who hope to be on the receiving end of all of that redistribution of wealth). Until you guys get real, and do something that gives consumers and businesspeople a reason to be optimistic about the future prospects of our economy, all you are doing is further running up our national debt and turning us into an impotent nation of glorified postal workers; with all of the Obama “investments,” there will be little left of our economy other than government employees and healthcare employees (and enough “workers” in entertainment and the arts to keep all the folks on the East and West coasts amused).
You guys are apparently so mad at the Enrons, investment bankers, AIGs, and Bernie Madoffs of the world that you would rather stage a modern reenactment of the Reign of Terror and the Stalinist revolution than save the economy. The simple fact is that our reluctant lenders would immediately start lending if Congress were to institute significant cuts in the rates of taxation on corporate income, capital gains, and personal income at every level. I realize that you and your Keynesian brethren are loath to admit that rate-cuts invariably lead to revenue increases (as has been amply demonstrated by economists such as Alan Reynolds, David Ranson, Glenn Hubbard and others), so, just hypothetically and for the sake of discussion, let’s assume you are correct and that significant rate-cuts would cause significant declines in tax-revenues: if we are willing to borrow or print another two or three trillion dollars merely in order to take one more shot at resurrecting the old Keynesian dogma, why not “spend” (or at least budget) that same amount to the anticipated “cost” of the tax cuts? I would personally guaranty that the economy would turn around almost overnight: people would start buying stuff, lenders would start lending, and the recession would be history.
Ooops, sorry, I forgot; the Democrats do not want the recession to be over just yet – they do not want it to end until they have instituted nationalized health-care, nationalized banking, nationalized auto-manufacturing, and nationalized everything else for which they can manufacture a “crisis.” Then, they can await the inevitable end of the recovery and claim that they accelerated it rather than delaying it.
[Posted on mecmoss.com 10 Feb 2012]