I'm trying to come up with a great one-stop-shop counter argument for people to look to. I'm currently editing these posts, so please don't respond:
Argument Against the Bailouts:
The Business Cycle
The business cycle has been a natural part of every economy since the dawn of man. Recessions come every 4-6 years despite all attempts to suppress the business cycle.
The 1800s
The 1800s is fawned upon by many free-marketeers, but is too complicated to discuss for the time being. There were many recessions, panics, and depressions during that era, but output and wages rose while prices collapsed. There were two central banks that both failed miserably.
- Unemployment has been a recurring part of the economy with recessions
Debt History
- Previously debt was for the financing of wars. Now it is an ever-flowing by-product of the permanent welfare/warfare state.
- Government debt is now eclipsing World War II with reckless abandon.
Inflation
- A noticeable increase in inflation occurred during the stagflation of the 1970s.
- Stagflation was considered an impossibility under Keynesian theory of the Phillips curve, but completely explainable under Austrian theory
To give an idea of the mentality of the Federal Reserve board on Inflation, VP Janet Yellen said this:
- The current VP of the Federal Reserve Board said real interest rates should actually be driven below zero if necessary to support a failing economy. Official policy to make savers lose money for storing their capital is an open possibility to the intellectuals that control the nation's interest rates.
A breakdown of the stimulus bill is seen here
The Great Depression of 1920
- There was a depression in 1920. The stock market fell almost as much as the Great Depression, but it was over within 2 years.
- Harding cut taxes and decreased the federal government almost to half its size
- Monetary policy did play a role, however. The Federal Reserve is said to have caused the recession because of raising interest rates to lower prices. When the recession hit, they lowered rates to create a recovery. Therefore, the recovery was not a purely free-market reaction, and the further ease of monetary policy drove the "Roaring Twenties" into a bubble leading to the stock market crash of 1929.
How much is the Bailout?
1 Trillion? 2 Trillion? Through subpenas, Bloomberg uncovered 8.5 Trillion promised as a backstop in 2008.
In June 2009, the Inspector General found a rough number of 23 Trillion:
- We could be conservative and say half of it is true, and that would still be over 12 trillion backing the system purely from the Fed.
- And add 6 Trillion for rescuing the home-mortgage agencies
Has the Bailout Worked?
- Shown is the actual results of unemployment versus the government estimates. While there was a rush to pass stimulus, it has not worked close to predictions.
But The Economy Was Saved, Wasn't It?
Corrupt and failing companies were saved, along with the politicians responsible for the problems. The impact was thrown onto the government of the USA, meaning the citizens of the USA. While politicians got to bail out their friends on Wall Street, it is the currency every citizen uses to pay for food which is now at a weaker point, and the government is hastening its fiscal collapse.
- The USA is, from a fiscal standpoint, very similar to the European countries currently having sovereign crises. A large difference is a more dynamic economy and the benefit of being the world reserve currency. Neither of these differences change economic laws of having to become a solvent economy or become bankrupt and powerless.
Does a Country Ever Grow It's Way Out of a Fiscal Crisis?
No, says Reinhart and Rogoff, in their comprehensive study of debt and banking crises.
Interview here
Argument Against the Bailouts:
The Business Cycle
The business cycle has been a natural part of every economy since the dawn of man. Recessions come every 4-6 years despite all attempts to suppress the business cycle.
The 1800s
The 1800s is fawned upon by many free-marketeers, but is too complicated to discuss for the time being. There were many recessions, panics, and depressions during that era, but output and wages rose while prices collapsed. There were two central banks that both failed miserably.
- Unemployment has been a recurring part of the economy with recessions
Debt History
- Previously debt was for the financing of wars. Now it is an ever-flowing by-product of the permanent welfare/warfare state.
- Government debt is now eclipsing World War II with reckless abandon.
Inflation
- A noticeable increase in inflation occurred during the stagflation of the 1970s.
- Stagflation was considered an impossibility under Keynesian theory of the Phillips curve, but completely explainable under Austrian theory
To give an idea of the mentality of the Federal Reserve board on Inflation, VP Janet Yellen said this:
- The current VP of the Federal Reserve Board said real interest rates should actually be driven below zero if necessary to support a failing economy. Official policy to make savers lose money for storing their capital is an open possibility to the intellectuals that control the nation's interest rates.
A breakdown of the stimulus bill is seen here
The Great Depression of 1920
- There was a depression in 1920. The stock market fell almost as much as the Great Depression, but it was over within 2 years.
- Harding cut taxes and decreased the federal government almost to half its size
- Monetary policy did play a role, however. The Federal Reserve is said to have caused the recession because of raising interest rates to lower prices. When the recession hit, they lowered rates to create a recovery. Therefore, the recovery was not a purely free-market reaction, and the further ease of monetary policy drove the "Roaring Twenties" into a bubble leading to the stock market crash of 1929.
How much is the Bailout?
1 Trillion? 2 Trillion? Through subpenas, Bloomberg uncovered 8.5 Trillion promised as a backstop in 2008.
In June 2009, the Inspector General found a rough number of 23 Trillion:
- We could be conservative and say half of it is true, and that would still be over 12 trillion backing the system purely from the Fed.
- And add 6 Trillion for rescuing the home-mortgage agencies
Has the Bailout Worked?
- Shown is the actual results of unemployment versus the government estimates. While there was a rush to pass stimulus, it has not worked close to predictions.
But The Economy Was Saved, Wasn't It?
Corrupt and failing companies were saved, along with the politicians responsible for the problems. The impact was thrown onto the government of the USA, meaning the citizens of the USA. While politicians got to bail out their friends on Wall Street, it is the currency every citizen uses to pay for food which is now at a weaker point, and the government is hastening its fiscal collapse.
- The USA is, from a fiscal standpoint, very similar to the European countries currently having sovereign crises. A large difference is a more dynamic economy and the benefit of being the world reserve currency. Neither of these differences change economic laws of having to become a solvent economy or become bankrupt and powerless.
Does a Country Ever Grow It's Way Out of a Fiscal Crisis?
No, says Reinhart and Rogoff, in their comprehensive study of debt and banking crises.
Interview here
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