Some wise and admonitory words from Ron Paul about the current mania for government spending/stimulus/bailout:
How did we get here? How do we get out? As usual, Washington has all the wrong answers. According to many politicians, we got here by not spending enough, not consuming enough, and not regulating enough. Now government, like some mythical white knight, is going to ride in to save the day by blanketing the economy with dollars, hiring an army of new bureaucrats, creating make-work jobs, and sending everyone some form of a bailout check. The debate seems to focus on whether this will cost enough to save the economy, or if this is just a “down payment” with much more government spending to come.
“Talk like that,” Paul notes, “would be comical, if the results weren’t going to be so tragic.”
Maybe there are negative, concave “bubbles” as well as the usual convex ones: sinkholes that attract and inspire unthinking enthusiasm just as the ballooning escalators do. Yesterday, we worked ourselves into an ecstatic frenzy of lending and borrowing. Today, coming out of our stupor and noticing the enormous hole we inhabit, we throw ourselves back into a Bacchanalian whirl of borrowing and lending, hoping to repurchase that delightful sense of oblivion that comes of blurring the distinction between debt and cash.
In fairness, the two can look a lot alike. In the flattering light of morning, they are at first glance indistinguishable. Withdraw $10,000 from your savings account and stack up the bills. Then open up a line of credit and do the same thing. Both stacks are “legal tender for all debts, public and private.” So start spending! It’s only late in the afternoon, when you’ve run through most of both stacks, that you notice the tiny slip of paper at the bottom of stack 2: “IOU,” it says, and, just in case you forgot, it has a due date stamped firmly on its face. What to do? The savings account where you got the first stack is empty. The teller who offered you that line of credit has gone out of business–too many people neglected to honor their IOUs.
Basically, we have two choices: 1) More whirling about, making the hole ever broader and deeper: “stimulus,” they chant, “bailout,” they cry. Or 2) we realize the decidedly un-ecstatic truth Ron Paul mentions: that “our economic problems are due to loose monetary policy, central economic planning, and the parasitic expenses of government. Unless we assess these problems honestly, we unfortunately have a long way to go until, like the junkie, we hit rock bottom.”