Friday, February 20, 2009

The Liars Get Caught

"$275 billion plan seeks to address crisis in housing" buy Sheryl Stolberg & El L. Andrews"

Congrats, to the N.Y.T. for trying to explain things. At least they are trying, just a little bit. By implication what they are saying is this. In order to pay all that dought back that is being loaned or borrowed the "taxpayers" (the newspapers' fav. word nowadays) will have to do two things. First, make lots and lots of money - this is usually no problem here in America, right? - and then secondly, they will have to not really spend it after they make it, because they are going to be using all of it to pay back the loans. Nor can they invest it, or loan it out to others, etc. No. They have to use all that money they will be making to pay back the loan: to pay back the trillions now being pumped in.

Now, how will that happen? In Elton John's terms: "it's impossible."

They say they want to put the economy back - back on track. They want to stimulate, or re-stimulate, the economy. Soze it can be just like the good old days. They want to restart the basic process itself. In our experience, this is to start another round of investing and making money. But how do you make money, in our accustomed experience of things? Ah. Well, first you borrow. But, you see, we are planning to stop all that. This is all pretty simple reasoning.

Even if you accept all the premises up until repayment, that means that when the "taxpayers" (I just love that word) will start making oodles of money again (a premise we have to accept here, to reason this forward), they will be using that money to - what else? - finally pay back that two trillion dollars they are forwarding into the system these days as their only inspiration on how to solve this credit problem or credit crunch. But then these economic actors (oh yeah: taxpayers) will have that much less to invest in "el futuro." The future.

By implication as I said the N. Y. T. is saying that in the future, we intend to stop borrowing.

It's impossible.

Figure it out for yourself. You know, I guess it is usually better that way anyways.

Now one last question: Why can they not admit this?

I - no trained academic - can figure this out. Maybe, with my explaation here, you can too.

Why, then, are the professional economists not telling?

p.s. there is no easy answer to that one. I guess maybe its cultural.

No comments: