While most in the mainstream media have been presenting Ben Bernanke as a hero who has saved the American economy, the reality is he may have done the greatest damage to it of any single man in American economic history.
Usually he’s applauded for being an expert and taking taxpayer’s money and “injecting liquidity” into the economy. Of course the term taxpayer’s money isn’t used, it’s just the focus on “injecting liquidity” that is written or commented on, as it takes away the inevitable consequences of his ignorant actions.
When I say ignorant, I don’t meant that he doesn’t understand the consequences of his actions in that he is stupid, what I mean by ignorant is he was fully aware of the consequences, and took the actions anyway.
If we just stopped there and talked about the inevitable inflation and cost to Americans for years into the future his actions would be bad enough, and deservedly criticized.
But it’s the propping up of companies and financial institutions which will end up costing more in the long run, as the awarding of terrible business practices and behavior has done more damage going forward than anything that has ever been done in the past.
If the free market system in the United States was truly free market, we wouldn’t be having to deal with this, but because the poorly run auto industry and some banks know they can get away with almost any practices they want because the government will come and bail them out will end up being one of the greatest debacles in business history, as we watch and observe the these very businesses continue on in their ways, even more emboldened by the understanding that lawmakers and the Ben Bernanke’s of the future will come in and “save” them.
In a true free market the healthy companies would take over the assets of a failed company that had value, and the rest would be laid to rest. But because of government and Federal Rerserve interference, we now face a disaster bigger than even the consequences of the bailouts themselves.
Look at the banks. In just a short time they’re far larger than they were before the bailouts, and as a result are instituting higher fees and less options because of the declining competition, which the government indiscriminately decided not to help.
The bottom line is the bailout of huge banks is worse than allowing them to fail and healthy banks pick up the pieces left over. But in the name of being saviors of the economy, politicians and the Obama Administration couldn’t leave it alone, believing they had an opportunity to curry favor with the public.
Now that the public is focusing and learning more on what is behind all this, that plan has started to backfire from a public relations point of view, and eventually will explode when the same actions that brought the crisis in the first place comes around again because of the reinforcement of poor business practices which government should never have gotten involved in.
Too big to fail may sound like a nice slogan, but those too big to fail are now bigger than they were before they should have been allowed to fail, and so are even more too big to fail, from that faulty reasoning.
Some are trying to paint this as a failure of free markets, when in fact it’s a failure of government for intervening in a way that could never be sustained, and which now has created even more problems which probably will never be able to be handled in the future.
The government has created a group of monster companies by doing this, and now what happens when business practices full of risk are resumed, knowing the government will swoop in again to bail them out?
Add this to the inflation which will arrive because of the enormous amount of money injected into the economy, and the financial future of America in the near and long term looks bleak indeed. We probably will never return to where we were before the crisis.
