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PrintAugust 18, 2009
Starting to Fizzle
After $150 billion in election-year check writing, $700 billion in TARP funds (with a shocking $150 billion in pork to get it passed), $787 billion in “stimulus” funds, $2 trillion in secret Federal Reserve loans; after bailouts of General Motors, Chrysler, Freddie and Fannie; after spending more than any government in the history of the world to fix the economy, MSNBC reports that hopes for economic recovery are “starting to fizzle.”
This from Barbara Marcin, manager of the Gabelli Blue Chip Value fund:
[Government intervention] is supposed to jump start the real economy and start consumer spending. In previous recessions with stimulus programs, autos and housing get under way, they start to create a little confidence, banks start to lend more, consumers start to borrow more and the second part takes off. I don't think there are any signs of that.
Why isn’t all the spending working? Isn’t the great John Maynard Keynes smiling somewhere in the heavens above?
It is not working because of two basic truths. First, government does not have money that it first has not taken away from the people, so if the government spends more, the people necessarily spend less. Second, government (which does not earn the money it spends) will never spend as wisely as individuals who have earned the money themselves.
When the recession started, government proposed massive debt and totalitarian economic control in exchange for economic recovery. They’ve taken the power, but we still don’t have the recovery.
Hat tip: Larrey Anderson
