"A Big Con"
By Bill Bonner
YOUGHAL, IRELAND – "Last Thursday must go down in history as one of America’s most important WTF days. That’s when the American Rescue Plan became law. It is so remarkable… so flat-out preposterous… so clearly a big step towards America’s rendezvous with disaster…And yet… the president and all his minions are fanning out… explaining… justifying… excusing… taking credit… and claiming paternity…of a monster.
Bloomberg: "The White House wants to underscore to Americans that the legislation Biden championed – and was only supported by Democrats – is central to jump-starting an economy battered by a year of lockdowns and job losses set off by the coronavirus…
“What the president recognizes from his own experience is that when it’s a package of this size, you know, people don’t always know how they benefit and what it means for them,” White House Press Secretary Jen Psaki told reporters Monday. “He believes the American people deserve every high-level person from our administration out there explaining, discussing, taking input.”
We sympathize with anyone trying to explain it. We couldn’t do it. It makes no sense… well, not in any other terms but old-fashioned political payola and economic folderol. But even in those sordid terms, it is a brain buster. The election is over. This is not the time to buy votes. This is the time to stab naïve voters in the back by not keeping your campaign promises. After all, politicians make absurd promises to get elected; few are fool enough to follow through on them.
But here is Joe Biden going coast-to-coast to remind voters that he actually did the dumbest thing he said he was going to do – passing one of the most ruinous laws in U.S. history… wasting 10% of U.S. GDP… one half of annual tax collections… in one reckless giveaway.He should shut up and let the money do the talking. Because the more you try to make sense of it, the more senseless it becomes.
Conversation With the Government: Just try to imagine an earnest White House aide gamely trying to explain it to an alert citizen.
“Look, our $1.9 trillion American Rescue Plan… it gives you dollars,” the admin guy might say. “You can use them to buy stuff. Then, the economy will boom. It will give you a fighting chance.”
“A ‘fighting chance’ of what? You sure you’re not just pulling a fast one…? You know, advertising that you’re the party that hands out free money?”
“No… no… of course not.”
“You talk about the money you’re giving ordinary people like me, but doesn’t most of the money go to special interests with lobbyists in Washington?”
“Well, we tried to address many of the problems in our country… so, we’ve designated certain sums for the organizations and groups that need it.”
“You mean, like bailing out union pension systems… and Amtrak? Isn’t that what you call a ‘boondoggle’?”
“That would be a very cynical way to look at it… Let’s focus on what’s really going on here. We’re giving every eligible America $1,400.”
“Yeah… and I hear there are tax credits, too… Together, they’re gonna be more than some families earn by working. You’re gonna change lives. But not necessarily for the better. I read in the paper that this is supposed to reduce child poverty by a third. But I don’t see how buying a bigger screen TV, more liquor, or a new car helps the kids. They need stable, honest families… not families that win the lottery.”
Stimulate the Economy: “Well, it stimulates the economy… so there are more jobs… and more goods and services available.”
“So people go out and spend this money, right? And that gets the economy all excited, right? But what happens when the free money stops? Doesn’t that get them un-excited? Won’t you have to keep giving people free money… or all that excitement will come to an end, and the economy will be depressed again?”
“No, no. Once we have stimulated the economy, it will grow on its own.”
“But didn’t you stimulate it last year? And from what I heard, your stimulus was five times as much as the actual loss from the COVID-19 shutdowns.”
“We are helping families through this difficult period.”
“That sounds good. But I see people earning more than $100,000 a year. And they didn’t lose their jobs… they didn’t suffer at all from the COVID-19 crisis. They don’t need the money. What sense does it make to send them checks? If they’ve got a few kids, between last year’s giveaways and this one, they could get something like $20,000. Doesn’t seem fair. Doesn’t seem very smart, either. Besides, $1.9 trillion is a lot of money. Isn’t that about half of your tax receipts… your income?”
“Well, yes…”
“You’re giving it away in one fell swoop? If I took half my income and blew it on a wild weekend in Las Vegas, I wouldn’t be doing my family much good.”
“You don’t understand. This will allow you to increase spending… it will be good for the economy.”
Better Off… Broke? “Everybody is already spending like crazy, thanks to all that money you gave us last year. They say consumer spending is rising faster than any time in the last 10 years. Is that a good thing? Maybe I’ve got it backwards, but I thought it was saving and investing that made people better off. I know in my own case, if I save and invest money, I’ll have more money… but if I spend it, I end up with less. This ain’t exactly rocket surgery. And by the way… Where did you get all that money? I thought you fellows were broke. Some guy on the news said your deficit is going to be around $3.3 trillion. That would be like me earning $60,000 and spending $100,000, wouldn’t it? I couldn’t do that for long. I’d lose my house, my car, my business…”
“Yes, but the government can never go broke.”
“Why’s that?”
“Because we can always create more money.”
“How do you do that?”
“Well, dollars represent real wealth – because you can use them to buy things. We have the power to create all the dollars we want. And they’re just like the dollars in your wallet.”
“But I earned those dollars in my wallet. I put in septic systems for a living. What did you do for your dollars?”
“You don’t understand. We are the government. We don’t have to do anything.”
“I know what my dollars are worth. I do the work myself. Now people can flush their toilets without worrying about them backing up or overflowing. That’s worth something. But if you don’t do anything to get your dollars… what are they worth? I mean, what have you got to show for them? Where’s the beef?”
Trust the Government: “I’m afraid we’re getting a little lost in the details of a complex, modern monetary system. Trust me, I’m from the government and I’m here to tell you that these new dollars are every bit as valuable as the old ones in your wallet.”
“Hmmm… and you can create as many as you want?”
“Yes…”
“Well, why stop with a measly $1,400? Why not $2,000… or $20,000? And if you were right – that you can make people better off just by printing up more money – why didn’t someone think of this sooner? The printing press was invented by Johannes Gutenberg in 1440. That’s almost 600 years ago. Since then, a lot of governments have tried printing up money to get themselves out of a jamb. I’ve never heard of any of them that made a success of it. I’m gonna level with you. This whole thing smells like a con job to me.”
