What are they buying? (Thomas Sowell)

Jewish World Review ^ | January 27, 2009 | Thomas Sowell

[jazusamo]

Everyone is talking about how much money the government is spending, but very little attention is being paid to where they are spending it or what they are buying with it.

The government is putting money into banks, even when the banks don't want it, in hopes that the banks will put it into circulation. But the latest statistics shows that banks are lending even less money now than they were before the government dumped all that cash on them.

Even if it had worked, putting cash into banks, in hopes that they would put it into circulation, seems a rather roundabout way of doing things, especially when the staggering sums of money involved are being justified as an "emergency" measure.

Spending money for infrastructure is another time-consuming way of dealing with what is called an immediate crisis. Infrastructure takes forever to plan, debate, and go through all sorts of hearings and adjudications, before getting approval to build from all the regulatory agencies involved.

Out of $355 billion newly appropriated, the Congressional Budget Office estimates that only $26 billion will be spent this fiscal year and only $110 billion by the end of 2010.

Using long, drawn-out processes to put money into circulation to meet an emergency is like mailing a letter to the fire department to tell them that your house is on fire.

[freekitty]

yes it is.

[GOPJ]

To this day, we are still subsidizing millionaires in agriculture because farmers were having a tough time in the 1930s. We have the Federal National Mortgage Association ("Fannie Mae") taking reckless chances in the housing market that have blown up in our faces today, because FDR decided to create a new federal housing agency in 1938.

Who knows what bright ideas this administration will turn into permanent institutions for our children and grandchildren to try to cope with?

Sowell's right - this could get a lot worse - a whole lot worse...

[boop]

Sowell is always a breath of fresh air. Thanks for the post.

[silverleaf]

I like that too!

[GBA]

It is frustrating to know what the now powers that be are doing and the probable result, but not being able to do much about it. Last election’s October surprise should be recognized as the greatest/worst in our history and socialism’s greatest win.

[ding_dong_daddy_from_dumas]

>>I honestly believe that the banks will continue not loaning money in hopes of obtaining another bailout from the TARP funds.<<

And now the states that have been spending too much will probably get fed money. The moral: keep going into debt, the fed will bail you out.

>>Easy money and these jacka@@ on the Obama team just don’t get it.<<

Politically, they should be happy about the way things are going.

[MrB]

They “get it”.

You’re just believing that their goals are really what they say they are.

[nina0113]

They should just give ME all the money and I promise to get it circulating right away.

[Tolik]

Thomas Sowell:

Everyone is talking about how much money the government is spending, but very little attention is being paid to where they are spending it or what they are buying with it.

...Using long, drawn-out processes to put money into circulation to meet an emergency is like mailing a letter to the fire department to tell them that your house is on fire.

If you cut taxes tomorrow, people would have more money in their next paycheck, and it would probably be spent by the time they got that paycheck, through increased credit card purchases beforehand.

If all this sound and fury in Washington was about getting an economic crisis behind us, tax cuts could do that a lot faster.

None of this is rocket science. And Washington politicians are not all crazy, even if sometimes it looks that way. Often, what they say makes no sense because what they claim to be doing is not what they are actually doing.

... If the Beltway politicians aren't really trying to solve this crisis as quickly as they could, what are they trying to do?

One important clue may be a recent statement by President Obama's chief of staff, Rahm Emmanuel, that "A crisis is a terrible thing to waste."

This is the kind of cynical revelation that sometimes slips out, despite all the political pieties and spin. Crises have long been seen as great opportunities to expand the federal government's power while the people are too scared to object and before any opposition can get organized.

That is why there is such haste to do things that will take effect slowly.

What are the Beltway politicians buying with all the hundreds of billions of dollars they are spending? They are buying what politicians are most interested in -- power.

... This administration and Congress are now in a position to do what Franklin D. Roosevelt did during the Great Depression of the 1930s-- use a crisis of the times to create new institutions that will last for generations.

Nailed It!
Moral Clarity BUMP !

This ping list is not author-specific for articles I'd like to share. Some for the perfect moral clarity, some for provocative thoughts; or simply interesting articles I'd hate to miss myself. (I don't have to agree with the author all 100% to feel the need to share an article.) I will try not to abuse the ping list and not to annoy you too much, but on some days there is more of the good stuff that is worthy of attention. You can see the list of articles I pinged to lately  on  my page.
You are welcome in or out, just freepmail me (and note which PING list you are talking about). Besides this one, I keep 2 separate PING lists for my favorite authors Victor Davis Hanson and Orson Scott Card.  

[Pearls Before Swine]

Tom’s dreamy alright... but you must know that’s an older picture (in Post 7). He must be in his 70’s now.

[dbz77]

That is a very old picture of him.

[dbz77]

To this day, we are still subsidizing millionaires in agriculture because farmers were having a tough time in the 1930s.

One could view farm subsidies as a way for America to maintain food independence.

[Servant of the Cross]

They are buying what politicians are most interested in — power.

The Republicans should be shouting this out every chance they get. Because if you actually wanted to stimulate the economy, which they say they do, then follow Sowell's advice and "cut taxes tomorrow, people would have more money in their next paycheck, and it would probably be spent by the time they got that paycheck, through increased credit-card purchases beforehand."

[listenhillary]

Good article bump.

[dsc]

“Why is our government so backasswards?”

The left-wing lunatic fringe metastasized, and has colonized or completely overwhelmed all our major organs.

It needs to be treated.

So many healthy cells (people) however, have jobs, and are too busy to help. Many regard the things that need to be done as uncivil.

Our immune system is severely compromised by the spread of the cancer to the media and academia.

Yesterday my 3rd grader brought home a six-page propaganda leaflet produced by Time magazine. The cover was Chairman Maobama with the caption, “Ready to Lead.” There was an article on Martin Luther King, to associate this secular saint of the left with the Bamster.

There was a list of the five all-time best speeches. One was King’s, two were by FDR, one Kennedy, and I’ve repressed the name of the foul commie skank who delivered the fifth. There was also assorted other junk.

I took a laundry marker and wrote large across it, “It is immoral to push this kind of leftist garbage on innocent children,” then signed it. I then realized that it was not my son’s job to deliver it, so I took it to the school and put it in the principal’s hand today.

Got the usual crap about, “If it was a picture of McCain...,” etc. He said he wasn’t going to pull them because “one” parent objected. He said “I’m not going to debate it with you,” and admitted that he hadn’t even read the bloody thing.

He asked why other parents hadn’t complained. I said, “Lots of people are averse to confrontations, or more afraid of consequences than I am.”

He said, “I don’t know what kind of consequences you think you’re at risk of,” to which I replied, “We’ll see.”

I’ll feel really badly if the teachers and principal start taking this out on my boy, but I’m going to keep a close eye out and pull him out of that school at the first indication.

Tomorrow I’m going to call the superintendent of Boise schools, Stan Olson, 854-4000, and begin the conversation, “What is your position on teachers using the classroom to distribute partisan political propaganda to students?”

So many people in Idaho are supposed to be conservative, but you couldn’t get as many as three of them to walk across the street to see the last supper with the original cast.

[freekitty]

I am so proud of you. You did the right thing.

[listenhillary]

Outstanding article bump

[GatorGirl]

The brilliant Mr. Sowell has an excellent point. Here is the conclusion that I have drawn:

The delayed impact of this stimulus will be just one more arrow in Ozero’s re-election quiver: “but I haven’t had time to effect CHANGE!”

Of course this assumes that the states will be able to get election fraud under control—all politics is local, folks!

[I_be_tc]

later

[monkeyshine]

These are things I’ve been trying to get across to the GOP but they either aren’t listening or are playing ball with the lobbyists who are throwing money at the DNC.

The government is on a path to tremendous debt, deficits, devaluation of the dollar and NO ASSURANCE of any relief or stimulus.

On the other hand, the government could

1) subsidize (backstop) a new ultra-low home finance program, e.g. lend to banks at 2.25% who will in turn lend to qualified homeowners at 3% fixed for 30 years. This would spur home buying, put money in homeowners pockets that they would save and spend. Everyone would get their home loans cut significantly and this would cost nothing, cause no debt, and definitely help the economy.
2) cut payroll taxes
3) cut income taxes

2 & 3 would cause some debt and deficits but that is needed to help small businesses and employees. Even if we took a 1 year tax holiday it would be almost the same as adding another $1 trillion in new debt and would definitely help the people.

The idea that the way to save the economy is via the government deciding when and where to spend money is simply ludicrous. If we are going to do radical things here is a radical idea - INVEST IN THE AMERICAN PEOPLE.

The root of this problem is in housing, so in housing (imho) is the first step out. Get people back into homes with a program that backstops loans. This way even if someone loses a home, there will always be someone else who can qualify because the rates will always be fixed.

Anyway my two cents. I agree with Sowell too. But its too late to go backwards so we need to find free market “style” solutions.