Wednesday, April 15, 2009

Bailout Funds Without Representation

The wise men of Washington keep finding more core beliefs that we have to give up. First it was free markets. Now it’s democracy…Many economists believe that helping financial institutions turn their less liquid assets into hard cash is a key step toward returning them to good footing. The best way to achieve that in a democracy would be for Congress to appropriate the funds to acquire the assets and for Treasury to borrow the money that it needs…But Congress is unwilling to appropriate enough money, so Treasury and the Fed have cooked up a work-around: the Fed buys the assets instead. Since the Fed exists outside of the normal budget process, no permission from elected officials is required….Fed’s Flood May Leave Democracy Needing Bailout, Kevin Bassett, Bloomberg News, 4/14/2009

This is an ignored story, and you should go to Bloomberg News and read the whole thing. Dictatorships, whether by a committee, or by a single colonel with a vision, always work the same way. Their first presumption is that the people are an irritating distraction. Their second assumption is that this presumption about the electorate is the best rationale for overthrowing democratic governments or setting aside democratic process. What do the people know better? is a question common to tyrants and politburos. The justifications never change. We had to act or There wasn’t time to consult Congress, and spoken under the breath they don’t have a clue anyway.

In a perverse way, the Stimulus, where Congress was consulted, might be used in the future to justify even more of this, for who acted more irresponsibly than a band of Democrat Representatives and Senators with a fervent desire to fund every pet project wanted by any constituent willing to foot a campaign bill? It gets uglier.

Should the Fed’s balance sheet climbs to $6 trillion, then its losses might be enormous and threaten to crowd out spending on defense, education and health care. And it would do so without Congress ever voting on the increase in the debt ceiling that would have been required if Treasury were performing the rescue…If the Fed receives the authority to issue debt whenever it wants to, then future bureaucrats can, in principle, play whatever financial games they want. The powerlessness of voters will be codified into law….(Fed’s Flood…, Bassett (cont’d)).

We are sleeping our way to tyranny. Is anybody awake besides those at Tea Parties?


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