Monopoly Money

Obama announced formally his plans to use $30bn of TARP repayment funds to support small business loans. There's only one big problem: the money isn't real.

We (US Citizens, through our gov't) loaned this money out on our own credit - not from some magical Scrooge McDuck vault of golden coins - pulling value from thin air as is our wont. So we extend credit, a loan, and then get that loan repaid (in some cases with interest). So dollar for dollar goes into the loan, and there might be some leftover, but it's again we should not consider it real because we still have outstanding red ink on our books and projects already approved without funding.

We're borrowing heavily (Keyensian economics; deficit spending; "spending like drunken Democrats") as a part of Obama's agenda, so any excess funds we receive from pre-existing projects should go to paying down said deficit before we splurge again on another binge of "stimulus" spending. Right?

Not exactly. This money - again, interest on credit - is being pushed right back out the door in another ill-though adventure in vote getting, I mean job building. We have nearly 2/3rds of the original "stimulus" bill still outstanding, but we can't draw from that pot, as it's tied up in to-be-determined pork projects in states where the DNC needs voter support.

No, we need to make a statement about punishing financial institutions - banks, brokerage houses, etc. We need to say "Here's *their* money, America, in *your* pocket!"

But it's a sham. We're just further draining the red ink wells on our collective desk and adding project after project to a "plan" of attacking unemployment that has so far seen job loss increase 2% more over the last year.

Ah well. Only so much damage can be done before the November 2012 correction. Markets have them; why not government?


-Erik