Monday, April 20, 2020

Don't Rely on Government Bailouts

Why?  Thy government does not care about you unless you happen to be a Wall Street insider or big bank or big corporation.  How can you tell?  Here are some reasons:
The small business loan programs ran out of money in days.  Much of the paltry amount of money they had to start with went to big companies who are now being shamed into giving some back.  I have not heard of the Fed running out money yet (mainly because they create it out of thin air).
The government thinks you can live on $1200 for a indefinite period of time after they took your job away.  Not only is that amount of money insulting, it is taking the IRS months to dole it out, that is if you can figure all the rules attached to it.  The Fed, by contrast, can get billions to any one of its cronies in seconds and its programs are detailed in short little memos.
What's great is all this is in plain sight.  There is no conspiracy, nothing is being hidden.  The fact is, most Americans don't care, don't understand and think the government is out to help them so they aren't outraged.
Lets take a closer look into one of the new Fed programs as an example.  The "Primary Dealer Credit Facility" (PDCF) is a program started to "support the credit needs of American households and businesses."  That is a direct quote and not something from the Onion.  Keep in mind that a Primary Dealer is the exact opposite of  an American households or business.  The dealers are the banks that the Fed does direct business with; the list is very short and does not include you and I.  Next, Read the memo (pdf) that describes the "terms".    Don't worry, its only 2 pages long with lots of white space. This document effectively states the Fed will buy a bunch of the dealer's debt (except for foreign currency backed debt) for an unspecified amount of time (it actually says 6 months with the caveat "or longer, if conditions warrant").  Nothing in here says anything about how this helps American households or business.  It is basically a way for big banks to unload crappy debt onto taxpayers.  This program is like the king giving gold to his nobles and expecting them to hand it out to their serfs.  This is just one of several programs cooked up to "help" the American people.  Feel free to peruse them, they are all basically the same.
As a libertarian, I don't think it is the governments job to promote business and hand out free money.  But when you compare the handouts to bank to those to regular people it makes you wonder what side they are on. I guess Ron Paul is right.
What the government should do (and I agree with Chris Martensen) is compensate all citizens due to the hardships caused by government actions.  No crazy rules or strings. And let all the companies that piled on debt for no good reason go under.  If they were in a worthwhile business, the next generation of entrepreneurs will provide those goods and services in short order.  And forget the banks, they got their chance 12 years ago and blew it.  Bring back sound money and finance.

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