(In other words, government-based ‘Central Planning’ is not working. And will not work in the future…)
The Morgan Stanley report goes on to conclude, “In short, it is impossible for governments to grow their way back to solvency.” All they can do is shuffle debt around, ostensibly for the benefit of powerful, politically connected constituencies.
And (brace yourselves…) the IMF advises that “Tightening” is the solution – even though “Tightening Hurts.”
The U.S. Government has provided trillions of dollars of funding (TARP, stimulus programs, bailouts) to major credit institutions and politically-connected constituency groups.
In addition, the Federal Reserve has purchased European debt – of all things. They have provided trillions of dollars in credit extensions to many of the very domestic and foreign banks that triggered the banking crisis in the Fall of 2008.
One of the more ‘visible’ bailouts came courtesy of the U.S. Government on behalf of Goldman Sachs. Goldman had purchased credit default swaps (CDS’) from AIG and didn’t happen to verify that AIG had adequate reserves to cover the CDS’ (derivatives). They didn’t. When the ‘you-know-what’ hit the fan, AIG turned their pockets inside out (no money). And the U.S. Government (that is to say, ‘taxpayers’) stepped in to ‘cover’ the massive Goldman bet that went sour:
“…according to the terms of the bailout deal struck when AIG was taken over by the state in September 2008, Goldman was paid 100 cents on the dollar on an additional $12.9 billion it was owed by AIG”
And on to the Federal Reserve ‘rescue’ initiatives…
Federal Reserve – credit extensions – allowing two major investment banks (Goldman Sachs and Morgan Stanley) to quickly receive commercial bank charters, allowing them to qualify for near-zero interest rate loans, with which to purchase Treasuries – and earn ‘free money.’ Lots of it.
Federal Reserve – Primary Dealer Credit Facility (PDCF) allowing major banks to pledge sub-investment grade collateral to qualify for additional near-zero interest rate loans – with which to purchase Treasuries and earn more ‘free money.’
Federal Reserve – Temporary Liquidity Guarantee Program (TLGP) for the big money center banks… ‘worth trillions.’
Federal Reserve – Public Private Investment Program (PPIP) – allowing banks to ‘off-load’ worthless assets onto the Fed balance sheet.
Again – government-based ‘Central Planning’ is not working. And will not work in the future… America is sinking deeper into the debt hole. Economic growth is stagnant. And for all of the trillions of dollars the government has ‘thrown’ at the problem, the average American family has benefited very little, if at all. In fact you could make a strong case that things are getting worse.
America doesn’t need the type of “Tightening” the IMF and Morgan Stanley are talking about. America needs liquidity and debt relief at the Family level.
It is time now for a new initiative.
The Leviticus 25 Plan will provide American families with the same access to liquidity (credit extensions) that the Federal Reserve has been granting to the banks.
And The Leviticus 25 Plan will pay for itself over a 10-year period with the ‘recapture provisions.’ And the ‘ripple out’ effect will yield efficient benefits for government tax revenues, small business revenues, the labor market, housing… and even banks – in the long run.
No other plan will deliver such benefits and set America back on course for financial stability and economic liberty for American families.