Wednesday, August 11, 2010

Fed Looks to Spur Growth by Buying Government Debt

Bloomberg "Federal Reserve officials decided to reinvest principal payments on mortgage holdings into long-term Treasury securities, making their first attempt to bolster growth since March 2009 to keep the slowing U.S. economy from relapsing into recession."

National Review "...the 2 or 3 percent of the population with so much money they won’t even miss a few thousand bucks. The other 97 or 98 percent will feel no pain, and we’ll be able to call ourselves deficit hawks when all those billions start rolling in.”
"On paper, this strategy may look promising. But a close look at who will pay the tab, where they live, and who represents them on Capitol Hill suggests that this approach has some major political flaws."

The latest bailout for public unions and spendthrift states. "Witness yesterday's 247-161 largely party-line House vote to approve a Senate bill shovelling another $26.1 billion out to state education and Medicaid programs. The White House has promoted the bill as emergency assistance for strained state budgets. But this unique brand of therapy drives states to spend more, not less. The "assistance" is so expensive that several governors were begging for relief even before Mr. Obama signed it into law."

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