Thursday, March 19, 2009

What We Need Is a Diversion...

The TV news couldn't talk about anything today aside from AIG bonuses. I could rant and rave about this, but my betters have shown themselves as such. If you want to read about why taxing the bonuses at 90% is irrational, stupid, tyrannical, and most likely unconstitutional, click here. My short answer? You'd have to give me a helluva bonus to get me to work at AIG or Fannie or Freddie. Either you want the bailout to succeed for these companies, or you don't. You can't have it both ways. (Of course, if you didn't have a government propping up failing institutions, you wouldn't have to worry about this, would you?)

Far more important, however, is this. The Fed is firing up the printing presses to the tune of 1.2 Trillion Dollars.

$1,200,000,000,000.00

We're gonna re-inflate this bubble with, well, inflation. Here's hoping that the monetary folks are right, and that it's much easier to halt inflation than it is to halt deflation.

The point is, we're not even talking about it. Congress and the mainstream media are busy handing out pitchforks and torches to go after AIG employees, instead.

Best quote of the day, from Chris Edwards over at Cato:
Aside from the dangers to liberty from overzealous members of Congress, there are issues of priorities here. While Congress has been busy with this particular inquisition, the Federal Reserve is moving ahead with a new plan to shower the economy with a massive $1.2 trillion cash infusion–an amount 7,200 times greater than the $165 million of AIG retention bonuses.

Keep your eye on the ball, people.

2 comments:

  1. this may sound a bit controversial, but i will welcome inflation with open arms. It will mean two things, one we will be in the eye of this storm and the system is correcting itself. Second it will mean that my house and car payments as a percentage of my income will dramatically drop over the long term. I do not think we will see inflation though. We are in something far more ominous. In order for there to be inflation we would need to see oil prices go up exponentially. Every time we have had inflation since the beginning of the industrial revolution has been preceded by large spikes in the price of oil. They tried that and it didn't work. The only thing that can fix the situation we are in right now is a massive ground war. Believe it or not we are preparing for one. The State of Michigan is actively converting auto suppliers into military and aerospace manufacturers. Google "DC3 General Bradley Lott" and have a great weekend.

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  2. My friend Dani writes me on this:

    "Seriously. I am way more freaked out about mega-inflation than executives getting mega-bonuses, because this is nearly guaranteed to affect me personally.

    I generally subscribe to the quantity theory of money (i.e. inflation = bad news), and banking that this is going to be a cost-push maneuver (where the money supply endogenously expands to accommodate the rising costs) seems to be a very dangerous gamble when things are already such a mess."

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