Posted by WARREN MOSLER on December 23rd, 2009
Dec. 22 (Reuters) —U.S. Treasury Secretary Timothy Geithner expressed confidence on Tuesday that the U.S. economy was on a solid recovery path, but said tight lending practices by banks still pose a risk.
He said the Treasury “will do what is necessary” to prevent another severe downturn. “We cannot afford to let the country live again with a risk that we’re going to have another series of events like we had last year,” Geithner said.
So how about a payroll tax holiday, revenue sharing for the states, and funding an $8/hr job for anyone willing and able to work? Maybe this is why:
On December 16, Mr. Obama told a television audience that if his “health care bill” doesn’t pass, “the federal government will go bankrupt” and that “health care costs are going to consume the entire federal budget.”
Someone needs to remind them how, operationally, the federal government actually does spend and lend:
(PELLEY) Is that tax money that the Fed is spending?
(BERNANKE) It’s not tax money. The banks have– accounts with the Fed, much the same way that you have an account in a commercial bank. So, to lend to a bank, we simply use the computer to mark up the size of the account that they have with the Fed.