Posted: March 14th, 2009 by Militant Libertarian
If an athlete injures himself and suffers great pain, we recognize the shortsightedness of giving him painkillers to keep him going. The pain might be masked, but at the risk of greater injury later.
That’s a good analogy for the inflationary policies now pursued by Washington. These policies may temporarily “stimulate the economy,” but they also disguise and aggravate the underlying problems. We will all pay a serious price.
Policy makers have thrown caution to the wind. Twelve-digit dollar figures are tossed about casually. Late last year, after then-Treasury Secretary Henry Paulson changed course—yet again—and announced that the Federal Reserve would commit $800 billion more in “new loans and debt purchases,” the New York Times reported, “Fed and Treasury officials made it clear that the sky was the limit.”
The total federal commitment as of that date was over $7 trillion.
The Fed had given up trying to make it easier for banks to lend to each other. Now, the Times reported, it “is directly subsidizing lower mortgage rates . . . doing so by printing unprecedented amounts of money, which would eventually create inflationary pressures if it were to continue unabated.”
When we hear that the U.S. Treasury is doing this or the Federal Reserve is doing that, we should remember that these agencies are run by mere mortals, and as such, they cannot know how to “fix” something as complex as an economy. But they certainly are capable of wrecking one.
That’s what their inflationary policies will do.
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