The further we get away from those fateful election of 2008, the more revisionist history takes hold.
Most recently, I keep hearing how the choice for the next election is between the guy who saved us from the Great Depression Part II and everyone else who wants to take us back to the policies that created those problems.
I’m told by people of all political persuasions that if the Federal Reserve, the U.S. Treasury, and the President hadn’t acted, I’d probably be in a bread line right now.
Fortunately, my memory is not as clouded as many others.
Hank Paulson (then Secretary of the Treasury), on that memorable Thursday evening, went to Congress and met with a select group of congressmen and senators, in addition to Ben Bernanke (Fed Chairman) and Tim Geithner (President of the New York Fed.)
Paulson stated that if $700 billion wasn’t authorized immediately, then the financial world as we knew it would end.
There would be colossal financial and economic chaos, even martial law, and it would be on the heads of those in that room.
He needed the money to buy the toxic assets (mortgages) from the banks.
Those comments terrified everyone.
Heck, they would have terrified me, too.
The gun sounded, and we were off to the races: TARP, TALF, stimulus, credits, clunkers, etc. Time simply doesn’t allow me to describe all the public fleecing machinations that occurred over the past few years in the name of saving the Republic.
The reality was that the Republic was not in danger of a Depression at that point, though it may be now. Rather, the danger at that time was the collapse of large businesses such as banks, automobile manufacturers, and insurance companies.
Like any business cycle, there would have been winners and losers, with the winners ready, willing, and able to replace the losers, no matter how big. Unfortunately, that pattern was interrupted so that certain well-connected entities could be saved. Think UAW.
That interruption disturbed the natural order of the economic cycle, and created “too big to fail.”
Ben Bernanke recently stated “We don’t have a precise read on why this slower pace of growth is persisting.” Ben’s answer could be found by looking back at that fateful Thursday evening in 2008. If Congress had simply said “no” back then we would be celebrating growth and not creating revisionist history.
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