The esteemed Vox Day writes...
"And ask yourself this question. If the Fed/USG can simply "print" credit money between them and "stimulate" the economy through massive urban bailouts, why are they not doing so already? This solution would appear to kill three birds with one stone:
1. Preventing the insolvent cities from defaulting
2. Making up for insufficient private and public spending
3. Reducing unemployment via subsized local government employment.
So, why would neither Ben Bernanke nor Barack Obama be pursuing, or even proposing, such an economic program? What is it that prevents them from "fixing" these three problems in this manner?"
Would that make the Fed money? That is after all the primary objective of the corporation in question. Given that the Fed has said that it is projecting to start losing money as early as 2014... I tend to think that the Fed believes that this kind of ramp up would not make it money... and would in fact cost it profit.
The problem with this whole post is its insinuation that the Fed isn't doing something, so it is therefore in capable of doing it.
This is obviously not the case... I say that... because well...
We already established in the debate that delivery systems are not nearly as important as Vox makes them out to be. George McGovern's guaranteed minimum income may have been rejected by the public so long ago... but are you so sure it would be so soundly rejected today?
They can get the money into the system. Spending really isn't that hard... and when you make up the rules to the system... you get to change them as you see fit.
So they absolutely can do it. The question becomes why don't they?
Well... the most obvious answer is they don't really believe it would do the things Vox is suggesting they think it should do. Or... they think that there are costs to doing it that outweigh those benefits. Also... they may fully intend on doing all of this... and they just haven't finished letting those who need bailing out twist in the wind yet.
They could be using this as a teachable moment. They could also be letting things crash deliberately so they can buy up real property cheap later. For example if I thought gold was going to sky rocket...it behooves me to get everyone else to think its going to crash... and then to perhaps even cause a crash if I am able.... so I can buy up massive amounts of gold for nearly nothing before the price jumps start.
This happens people. We have real historical examples of it; British treasuries after Waterloo for example.
The best answer though... is the Fed probably just doesn't think its nearly as bad as we do. They think things are getting better... and these are just the pains of switching back from a stimulus based economy to a real one.
The Fed isn't omniscient. I already demonstrated that they have no idea how much money is even out there. About many many things... they are totally clueless. They are blinded by equations that they have always assumed were correct... but which are in fact... totally useless.
Why not both?