Friday, March 11, 2011

No Need For Pain

While I can never figure out exactly what the Fed has statutory authority for - though I suspect 'whatever they say they do' is probably the correct answer - conceptually there's no need for any of the misery which is surrounding us. Bernanke could fire up the helicopters and shower money on us all. They could just print billion dollar bills and hand them out to state governments. Sure there are a couple of potential problems. One is inflation, though measures like this which happen once and then stop aren't likely to create sustained inflation. And, yes, there is the 'rewarding bad actors' and moral hazard problems where you don't want the state governments to believe that the bailouts are always around the corner.

But, you know, we've already rewarded a lot of bad actors, ones who happen to be really fucking rich, and who still rightly believe the bailout is just around the corner.