The Coming Depression, Who To Blame

A lot of the tragic unemployment and other economic stress that we have today can be traced back to the spring and summer of 2006 when the book smart genius Ben Bernanke had just taken the helm as Federal Reserve Chairman and Henry Paulson who is arguably the best salesman in the world took over as Treasury Secretary. Together these two brilliant minds engineered a scheme to drive asset prices, mostly stocks, higher. The thinking was that the resulting wealth effect would keep GDP moving higher until other economic forces took over and the economy moved ahead on its own. Of course it was also reasoned that that rising stock prices would generate enough demand in the housing market to keep that bubble from busting.
By the summer of 2008 it was becoming apparent that two years of goosing asset prices had produced a house of cards that was going to crumble regardless of what these wise guys came up with. The Bailout of 2008 was introduced as if it was a brilliant heroic plan to save the world from an accidental set of circumstances that were threatening human kind. The Bailout of 2008 was more than anything a face saving maneuver. The people, who were seen as saviors, should have been walking across our television screens in handcuffs. In terms of misallocated resources and shifted economic burdens the costs of TARP is almost unfathomable.
It seems only the most brilliant minds have the confidence to attempt to do what the rest of us accept as impossible. In my mind, plans to steer the economy forward by dismantling our free market system are always going to end with a tragedy. The public will probably never know just how badly they were screwed by the economic solutions that were introduced in 2008. It is the nature of economics that the most severe consequences of are not likely to be traced back to actual causes.

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