Money to burn
OK, he didn't find a way, let alone a reason. His administration just announced its determination to do so anyway.
I realize there is more to life than failed subprime investment vehicles. But much as I would like to write about Michael Ignatieff deciding to let a handful of opposition MPs actually oppose the budget, roughly seven seconds after realizing he couldn't stop them, or the Heart and Stroke Foundation suggestion, trumpeted by the press, that the government should regulate the price of foodstuffs so pasta doesn't cost more in Dawson City than in Barrie, the fact remains that the meltdown of thought and government finances in the United States is of primary importance to all of us now.
And while it's a long way from Canada to Washington, especially these days, if we all raise our voices a little one of us might emit the final "Yawp" that will be heard somewhere outside the House Republican Caucus.
It's increasingly urgent that we do so. I gave a speech on Tuesday on "How not to stimulate the economy" that, with all due respect to the expensive follies of our own governments, gave pride of place to the Americans for the magnitude and hysteria of theirs.
At that point the latest costly weirdness was the Obama administration's delaying revealing its "plan" to spend $350 billion bailing out banks, because refusing to explain specifics would make Congress more willing to fork over another $827 billion to bail out whatever. Oh, and because, the New York Times added, "Details of the new plan, which were still being worked out during the weekend, are sketchy." So it's not really a plan, then, is it? (And by Thursday the other bailout had become $789 billion; who knows what it might be come Monday.)
As it turned out, the details -- revealed Tuesday after Congress voted -- were both sketchy and scary. As the Times then reported, the plan-like object "is far bigger than anyone predicted ... Administration officials committed to flood the financial system with as much as $2.5 trillion..."
I found that ominous, because I already felt that $350 billion was a lot. Where do they think they're going to get all this money?
Well, the Times continued, $350 billion was to come "from the bailout fund and the rest from private investors and the Federal Reserve, making use of its ability to print money."
So part of the Obama's administration's hope is that private firms will step up and purchase enormous quantities of toxic assets with whatever money they have left after huge deficits, high taxes, ominously underfunded social programs and a bewildering succession of hugely expensive amorphous bailout plans.
Unfortunately the private sector has, very belatedly, come to the realization that if it's toxic it's not an asset. It is time governments came to that realization too.
Next they must recognize that a determination to hurl staggering sums about ataxically is very bad for desperately needed private sector confidence. As the Times further observed, "the initial assessment of the plan from the markets, lawmakers and economists was brutally negative, in large part because they expected more details." Fools. Why would we give you details? You might be tempted to think we politicians knew what we were doing.
Or not, since the part of the plan to save the economy by printing money was scarier even than the private purchase of toxic assets or the vagueness and delay.
Last week I wrote: "When the U.S. Congress threatens to apply sweeping 'buy American' requirements to its stimulus package we are driven to stop debating the dubious merits of stimulus packages and start trying to explain free trade instead. From the beginning." And now, it seems, the U.S. administration wants us to stop debating the dubious merits of protectionism and start trying to explain sound money again. From the beginning. As if we hadn't fled Salvation Island, refused to Free Silver and hosed back all manner of other money quackery over the years.
When you increase the money supply, but not the real wealth of a community you don't get richer, you get inflation. Everywhere, always, for obvious reasons. Inflation lies, confuses and confiscates.
We need sound money, balanced budgets and sensible policy. And above all, we need to stop panicking expensively, and instead give people time to collect their wits and start sorting out their investments and personal finances.
[First published in the Ottawa Citizen]