Like a monster from an old horror movie, the Treasury plan keeps coming back from the dead. Yes, we are in a financial crisis that needs urgent, determined, and clear-eyed help from the Government. But this plan is fundamentally flawed. It won’t even work, leaving aside its horrendous cost and long-lasting damage to the financial system. Every argument for it appeals at some point to magic. Buy a few mortgages and magically the value of all of them will rise. Spend $700 billion to “do something,” without stating how that action will help, and by magic “confidence” will be restored. The additions and sweeteners in the Senate version, and those on the table in the house, are counterproductive, horrendously expensive, or a comical pinata. Counterproductive: protecting homeowners and renters may or may not be a good policy idea, but if you don’t make people pay back mortgages, the value of those mortgages falls even further. Horrendously expensive: The bill mandates that purchases be made to preserve tha value of retirement accounts. The uncertainty that this bill introduces is already making matters worse.
Economics and Elections
Economics and Elections
November 21st, 2024
