more from Geithner and Obama

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Geithner: Tight Lending Threatens US Recovery

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.


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3 Responses to more from Geithner and Obama

  1. beowulf says:

    Actually, I agree with you that Warren’s plan is superior to somply expanding Medicare. Medicare’s big advantage is that it already exists and could scale up almost instantly. The bureaucracy, payment system and customer accounts (it is tied to Social Security after all) are already in place. So even if Congress adopted Warren’s plan, it’d be easier to restructure Medicare than to start a new federal healthcare agency from scratch.

    I take your point that the Nazis are, for many obvious reasons, no one’s idea of good government or good people. I mentioned General Eisenhower because, as you know, later on as President he based his Interstate Highway System on the fine German autobahns he and his commanders found when they occupied Germany. I’m just noting that the system of public finance they used to build those roads wasn’t too shabby either.


  2. Matt Franko says:

    I think Warren has a much better plan for Heathcare. We can learn nothing from the Nazis. Resp,


  3. beowulf says:

    Good Lord, that’s the most depressing thing I’ve read in a while.

    President Obama could solve the healthcare crisis tomorrow by simply opening up Medicare to everyone (just as Max Baucus snuck in a Medicare expansion for the residents of Libby MT) and pay for it by the Fed creating the money as the medical bills come in. Since the goods and services are created first and Medicare invoiced afterwards, it wouldn’t be inflationary even in a strong economy. Of course, you’d have workers and employers getting to keep what they’d otherwise be paying in current Medicare taxes and insurance premiums, but that’s a problem we can live with.

    That’s sort of how the Nazis paid for their autobahn system that General Eisenhower was so impressed with.

    Hitler stressed on May 31, 1933, that the Reich budget must be balanced. A balanced budget meant reducing expenditures on social programs, because Hitler intended to reduce business taxes to promote needed private investment. To avoid reducing social programs, a large work program without deficit spending had to be financed outside of the Reich budget. Hitler resorted to “pre-financing” (Vorfinanzierung) by means of “work-creation bills” (Arbeitsbeschaffungswechseln), a classic response of using monetary measures to deal with a fiscal dilemma..

    Nazi economic experts understood that sovereign credit creation for purposes of job creation posed no inflationary threat and that it would be a far more responsible policy than the conservative approach of tax increases and welfare cuts to balance government budgets.


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