LTE: Rational Economy

Economic woes are the result of regulation and intervention
Tim Peck | Asheville Citizen-Times | December 28, 2008

Dear Editor,

In his guest commentary, “This is a great time to invent a truly rational economy,” (AC-T, Dec. 19), Bill Branyon characterizes the inevitable consequences of government interference in the marketplace as the “current crisis of capitalism.”

There is no free market in this country – and never has been. And it certainly cannot have magically become the cause of any “current crisis.”

On the contrary, our current crisis is due precisely to government intervention and regulation, and not from any lack of them. Far from it, our hampered economy is heavily regulated; most notably, the banking, housing, and auto industries.

Capitalism, on the other hand, is the social system of freedom and it demands a strict wall of separation between economy and state. (Ironically, Mr. Branyon would have us believe that we are prisoners of freedom?)

For a slave, there are no degrees of freedom. He is either fully free or some variety of slave. Neither are there degrees of capitalism. Any form of “mixed economy” is simply a species of statism; whose key contributions to the economy are the destruction of liberty and wealth.

Mr. Branyon glibly informs us that we are “prisoners of the invisible hand of capitalism.” The only thing invisible in this matter is Mr. Branyon’s grasp of economics and history.

###

Gordon Smith wrote:

"Is it also fair to attribute economic boomtimes to government interference?"

MY RESPONSE:

Yes, the government is responsible for boom-bust business cycles by manipulating the money supply and interest rates.

The "boomtimes" are entirely artificial and must inevitably bust. It is a falsification of reality by the government and this causes malinvestment, poverty, inflation and unemployment -- none of which are articles of "faith."

These booms help the rich and well-connected and the busts hurt the poor and middle class.(Just recall the so-called "Roaring 20s" and the subsequent wrenching Great Depression.)

It is not the job of the government to run the economy and its interference is the cause of the (artificial) booms and (very real and painful) busts.

What we see in the economy today is a repeat of the ill consequences of intervention and regulation of an otherwise free market that continually seeks equilibrium. The only thing preventing those market corrections is the disastrous meddling of government in the economic affairs of free individuals.

For a more detailed analysis of the Austrian Business Cycle Theory, I recommend reading Ludwig von Mises on the subject. As Rothbard succinctly states:

"The classical, and now the Mises, theories have been generally scorned by modern writers, and mainly for this reason: that Mises locates the cause of business cycles in interference with the free market, while all other writers, following Mitchell, cherish the idea that business cycles come from deep within the capitalist system, that they are, in short, a sickness of the free market. The founder of this idea, by the way, was not Wesley Mitchell, but Karl Marx."

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RELATED

Austrian Business Cycle Theory: A Brief Explanation
Dan Mahoney | Mises Institute | 5/7/2001
The media’s favorite phony solution to the economic downturn is for the Fed to drop interest rates lower and lower until the economy registers an upturn. What is wrong with this approach? Printing money—which is what reducing interest rates below the market rate amounts to—is an artificial means of recovering from the very real effects of an artificial boom. This point, however, is completely lost on most commentators, because they haven’t the slightest understanding of the Austrian theory of the business cycle.

Austrian Theory of the Trade Cycle
by Mises, Rothbard, Haberler, and Hayek
Booms and busts are not endemic to the free market, argues the Austrian theory of the business cycle, but come about through manipulation of money and credit by central banks

The Fraud of Government Intervention
By Robert Tracinski | Intellectual Activist | December 31, 2008
The top story of 2008 is undoubtedly the revival of the left. After nearly two decades on the defensive following the collapse of the Soviet empire--the definitive example of the failure of socialism--advocates of a government-controlled economy are trying to make a comeback. How brazen has this leftist revival become? It has gotten so far out of hand that some on the left are openly defending central planning. Yes, comrades, you read that right...

Capitalism and the Moral High Ground
Craig Biddle | Objective Standard | Winter 2008
Economists from Adam Smith to Ludwig von Mises to Henry Hazlitt to Thomas Sowell have elucidated the general mechanics of a free market and demonstrated the unassailable practicality of capitalism. They have shown how freer markets provide better and cheaper health care, cleaner air and water, safer automobiles and airplanes, ample food and energy, better and cheaper schools, and so on. But their arguments have not convinced the world to embrace capitalism. On the contrary, people today are condemning the system of private property as loudly as ever.

Capitalism on Campus

Capitalism on campus, WCU follows profitable trend
by Nelda Holder | Mountain Xpress | 12/23/2008

A $1 million gift from the BB&T Foundation to Western Carolina University has raised basic questions about academic freedom versus funders’ ability to affect curriculum decisions.

[...] Ronald Johnson, the dean of WCU’s College of Business, actively sought the funding and says he’s fine with the philosophical implications. “Not that we want students to come out and be ardent supporters of objectivism,” he notes, “but we want students to come out and not be automatons, which is what happens in the colleges of business where there is no intellectual foundation.”

MY RESPONSE:

If WCU does not feel it should agree to the terms of a generous donation from a successful business enterprise that practices what it preaches, then, by all means, they can refuse the money.

As the article correctly states, this practice is “not uncommon.” So, why is it an issue now? Is this part of an ongoing series of articles on university donations?

As an Ayn Rand Objectivist myself, I am of the opinion that the students of WCU’s business school will profit handsomely from the inclusion of an explicitly pro-capitalist study of political economics.

Furthermore, I hold that capitalism is the only moral political-economic social system because it is the only one that fully recognizes, respects, and protects individual rights, and it’s about time someone began looking into the possibility of instituting just that kind of system in this country. Hopefully, within a generation.

Three cheers to BB&T!

###

Additionally: Mr. Greenspan is not a “free-market guru.” He rejected the free market philosophy of Ayn Rand early in his career and even took a position as Federal Reserve Chairman—a stark contradiction to the philosophy of individual rights, limited government, and free markets that is embodied in the over-arching concept of Capitalism.

** UPDATE **

4tees writes:

Ayn Rand’s theory is as bogus as the communist ideology she loathed. Both rely on human kind not trying to achieve an unfair advantage if left to their own accord, something history clearly shows is unrealistic to expect.

No system of economics or governance can or will survive long term without checks and balances, and a built in method to prevent entrenched interests from gaining undue control. Not one society in history has gotten it right yet.

It is worth including Rand’s work in any discussion of economics, as it is worth including most notable failed theories; so that we can learn from the mistakes of the past

MY RESPONSE:

You raise a very good point.

Capitalism does indeed rely on ethical behavior and this is what makes it the only moral social system.

People can be dishonest or manipulating regardless of the political-economic system they live under. Their villainy is not a consequence of the system. This is a universal ethical issue, not a particular political one.

Capitalism demands that people abstain from violating the rights of their neighbors and is not properly constructed without reference to an over-arching and objective rule of law (over against the rule of man) which constrains, prohibits and penalizes predation and willful disregard.

This is the definition of free markets. Any market that is not constrained by the rule of law is not free. These enforceable constraints, along with the free market forces of supply and demand, are its “checks and balances.” Beyond this, individuals are free to conduct their voluntary, peaceable economic affairs as they see fit and to their own profit.

However, under a Socialist system, or an Interventionist system, which we have in America, the violation of individual rights is endemic to the system; and that infringement is perpetrated by the very institution established to guard their preservation: The government.

4tees writes:

“By your argument communism is an equally viable theory to capitalism. Both require ethical behavior, as you describe, to function as intended. If man could be expected to act in such a manner either form of society could flourish.”

MY RESPONSE:

1. The ethical foundation of collectivist economies is injustice and the denial of reason and free will. The socialist state could not exist for one moment without the violation of individual rights. From the first day, Socialism alienates the individual from his right to property, his right to free trade, and his right to free association.

2. Pure Socialism is impossible. It can never calculate prices for commodities and must always rely to some degree on free market mechanisms to accomplish the simplest commercial exchanges.

3. Therefore, Socialism cannot be ethical nor can it flourish. The only political economy that is both ethical and flourishing is Laissez-faire Capitalism.

4tees writes:

“The laws required to ensure markets remain free markets would be very invasive and require a large external body (which is also subject to non-ethical behavior) to regulate and oversee said markets.”

MY RESPONSE:

1. The protection of individual rights is not invasive, but in fact absolutely necessary to a free society. And it is for the protection of individual rights that governments are instituted among men.

2. The only way government (or “a large external body,” as you put it) can be “subject to non-ethical behavior” is in the case where it lurches away from Capitalism and toward Socialism; which is the case that obtains in America.

Thunder Pig writes:

"Call it what it is: Meritism"

MY RESPONSE:

Yes, but this not what it is. This definition isolates one part and uses it to refer to a complex whole. Neither is the concept of desert -- that is, getting what you deserve -- a phenomenon exclusive to the political or economic realms; as the author admits (par. 8).

Capitalism is more than this one characteristic.

Laissez-faire Capitalism is a complete political-economic social system of freedom that recognizes, respects and protects individual rights, is based on the private ownership of the means of production, derives its principles from the facts of reality, human nature in a social context, and the ethic of rational self-interest, and finds its expression in peaceable, voluntary exchange within a framework of justice and the rule of law.

chops writes:

“What’s wrong with this situation is that WCU does not have the freedom to choose who offers $1 million. BB&T however, has the power to be self-serving through its own exploits and our faulty capitalist policies.”

MY RESPONSE:

1. The freedom that WCU does have is to choose whether or not to accept funding from a potential benefactor. This is not something that is “wrong.” If WCU would prefer not to receive the funding, and thereby not agree to its conditions, they are free to do so. BB&T is under no obligation whatever to offer funding to anyone and WCU is under no obligation to accept any. That is freedom of choice.

2. There is nothing wrong with BB&T being self-serving. In fact, this is their right: to use and dispose of their capital in any legal and peaceful way they see fit. Just like you and I.

3. Any profit that BB&T acquires is done so entirely appropriately by offering valuable products and services that customers voluntarily want to purchase and use. Profit-making is a perfectly moral human activity. And all this is in spite of being heavily regulated under an Interventionist political economy, not a Capitalist one.

chops writes:

Without profit, perhaps one’s motivation to raise our standards and incentive for innovation and production would be simply for the betterment of the greater community. Love for “thy neighbor” is a very strong force: in a highly evolved society, it motivates people to volunteer and become activists, benefactors and philanthropists.

MY RESPONSE:

In anticipation of the next issue of the Mountain Xpress, I would like to thank everyone for an engaging discussion on this story and bid this one adieu with these final thoughts:

1. Socialism is both immoral and unsustainable.

2. Capitalism does not exist in this country, and never has.

3. Our current economic crisis is a failure of Interventionism, not Capitalism.

4. Congratulations to WCU for their wisdom in accepting the very generous donation from BB&T. Congratulations to BB&T for making it a condition of their generosity that WCU add Ayn Rand’s remarkable novel “Atlas Shrugged” to their required reading list.

5. Who has done more to increase the general prosperity and happiness of the poor? Mother Teresa (self-sacrificial ‘love’) or Bill Gates (self-interest and profit).

[signing off]

-TIM PECK

---

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Ayn Rand Center for Individual Rights

The Clemson Institute for the Study of Capitalism
The mission of The Clemson Institute for the Study of Capitalism (CISC) is to examine and increase public awareness of the moral foundations of capitalism.

What Is Capitalism? [audio]
By Ayn Rand

BB&T Spreading Capitalism On Campus Through Ayn Rand
Marc Gallagher | LibertyMaven | December 24th, 2008
I knew there was a reason I banked with BB&T.

Lecture: Unregulated Laissez-Faire Capitalism [video]
Dr. Yaron Brook | Ayn Rand Institute | April 14, 2008
Delivered at the University of California, Irvine. Q&A [video]

Who controls what’s taught?
By Julia Merchant |Smoky Mountain News | 1/7/2009
Western Carolina University’s College of Business recently secured a $1 million donation from BB&T — but not before discerning faculty fought to loosen the strings that came with the donation.

Bubble Boy: Alan Greenspan’s Rejection of Reason and Morality
Gus Van Horn | Objective Standard | Winter 2008
“[The] idea that Greenspan possessed ‘free-market convictions’ and that those convictions are why he failed to rein in unsound lending practices is ridiculous. The very purpose of the Federal Reserve—the central bank at the heart of our troubled, government-controlled economy and the money machine that Greenspan operated for almost twenty years—is to manipulate the market. Such a ‘bank’ would not even exist in a free market, and its precise function in our mixed economy is to engage in unsound lending practices as a means of such manipulation.”

Letters to the Editor
Smoky Mountain News | January 14, 2008

Selfishness

Let's get over our selfishness and help those in need
Terri Decker | AC-T | December 8, 2008

Dreaming of those snowcapped “Thomas Kinkade cottages” sitting like a beacon of enchantment through the forest with ember glow spilling out from the windows and smoke billowing magically from the chimney, I anticipate the warming comforts of family and friends. . . What happened to the conviction of believing in something bigger than ourselves though? If you don't believe in a higher power, what of the network of people around us working together as a thriving, living unit?

RESPONSE (w/edits)

The writer's attempt to sneak a subtle collectivist morality into a syrupy fable does not go unnoticed. She urges us to abandon selfishness -- which she intimates is a vice -- in favor of a sense of unity and fealty to "something larger than ourselves."

To the contrary, we are not a "living unit." Human beings distinguish themselves from the animal kingdom by this very fact. Certain moral and political philosophers would like to characterize human beings as metaphorical ants in an ant farm. But this is a misapprehension -- and a serious and consequential one.

Human beings are individuals who purposely and voluntarily choose to cooperate in a variety of societal arrangements, properly guided by self-interested motivations, and to our greatest mutual benefit.

People are not parts of an organism. They possess Reason, Free Will, Self-Consciousness, and are Individuated; that is, each person is unique. It is individuals making free choices and seeking their own rational long-term self-interest that makes social cooperation work. And the result is a synergy of value that delivers the greatest prosperity to the greatest number.

It is for this reason that I disagree with the writer and her advocacy of a collectivist self-image of humanity.

###

Sylvia Bokor comments:

Ms. Decker's article ignores the extent to which Americans have already spent millions in helping those in need. We have helped people through private charities, and through foreign aid to victims of hurricanes, earthquakes and fires.

To use the term "selfish" as if it were a dirty word ignores the source of value-creation. Men create values because they're concerned with their own interest---the dictionary definition of selfishness. To admonish us for being selfish as if it were a moral offense and simultaneously cry for the values we've created to "help those in need" is a monumental evasion.

Decker's collectivist premises are clear. For instance, referring to the irrational conduct of some New York shoppers, she asks, "What's happened to our humanity?"---as if we were all responsible for the disgraceful conduct of a few.

People like Decker are forever talking about things "higher" than you while asking you to give more and more without a single note of gratitude. Ignore her. Americans, you are to be thanked for your generosity, for your benevolence, for your concern for your own self-interests, which is a virtue. Thank you.

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The Virtue of Selfishness
Ayn Rand | November 1964
rational interests of men do not clash—that there is no conflict of interests among men who do not desire the unearned, who do not make sacrifices nor accept them, who deal with one another as traders, giving value for value.

Ayn Rand's Normative Ethics: The Virtuous Egoist
By Tara Smith | April 2007
Far from representing the rejection of morality, selfishness ... actually demands the practice of a systematic code of ethics.

Christmas Cheers

Will forego the commercial and focus on the spiritual
Michal H. Hall | Letter to AC-T | December 7, 2008

[...] Giving at Christmas (which probably evolved from the giving of the wise men) is a natural response of the season. But it has evolved into a sick and burdensome thing bringing chain stores into the black. Instead of running enslaved before it, we need to reshape our giving at Christmas into something appropriate to the season. My wife and I are sending out a letter to family saying that we will only give small personal gifts (that we either see during the year or personally make), or we will give to a charity in their honor. But no more will we bow to the chaos of commercialism that threatens the peace and wonder of this beautiful season.

RESPONSE (w/edits)

The writer may do as he likes. The rest of us will patronize businesses that provide the community with value in the form of products, wages and entertainment.

The writer can demonize the business man and his enterprise. But in fact he is making a demon of his neighbors: the people who are satisfied by the businessman's productivity and his vigilance to anticipate and satisfy demand.

Commerce is peaceable, voluntary exchange in a free market for mutual benefit. It entails free people using their minds for their own long-term, rational benefit. That benefit includes the ability to increase one's happiness by sharing store-bought gifts with loved ones.

Instead of finding joy in the happiness of others and their free action to pursue their own happiness, the mean-spirited writer chooses to characterize his prosperous and energetic fellows in a most uncharitable manner.

And in so doing, he demonizes only himself.

---

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Why Christmas Should Be More Commercial
Leonard Peikoff | 2001
Christmas in America is an exuberant display of human ingenuity, capitalist productivity, and the enjoyment of life. Yet all of these are castigated as "materialistic"; the real meaning of the holiday, we are told, is assorted Nativity tales and altruist injunctions (e.g., love thy neighbor) that no one takes seriously.

Fairness Doctrine

In a discussion on the URTV mailing list, a member offered some comments on a video supporting the re-introduction of the Fairness Doctrine:

"skilarqaol" wrote:

RFK Jr on the Fairness Doctrine [video]
And a strong argument for bringing it back.

I would have to disagree.

What Mr. Kennedy and others are essentially proposing is to use the coercive force of the federal government to reduce individual liberty; in this case, in the marketplace of ideas.

This is a view that Mr. Kennedy shares with his political adversaries: conservative Republicans.

Conservatives have long supported the FCC’s war on so-called indecency. Both sides endorse the principle that the government should be dictating what Americans can and cannot say — they only differ in the way they want to use the censor’s pen to advance political agendas. -Don Watkins

For the supporters of so-called "fairness" to abandon persuasion in favor of coercion is, sadly, an admission of defeat. If reactionary liberals were competitive or even dominant in radio, the impulse to use force to achieve "fairness" would evaporate.

The Fairness Doctrine is an authoritarian encroachment on the rights of individuals by interfering in the marketplace of ideas behind the curtain of the law. It is for this reason that I do not, and cannot, support it.

###

In response, "skilarqaol" wrote:

The video made some points I find interesting, in that 5 or 6 huge companies own our national media...

Yes. Why have "The Big Five" when we could have the small 500?

The reason there are "5 or 6 huge companies" owning radio is because of government interference in the free market.

It is the government that grants licenses and regulates broadcast companies. This government intervention allows media monopolies to exist by hampering competition from entrants and by lending a reciprocal legislative hand to the most powerful among them. The larger the corporation the better they are able to afford the costs of licensing, regulation and lobbying, as well as afford the corporate largess that redounds to the lawmaker's benefit from time to time in exchange for a favor. Thanks to the government, the bigger the better.

And that's what we're seeing: Media conglomerates are simply playing by the rules forced upon them by the government in order to survive and continue providing value to the community for profit. That means, as a sad consequence, consolidating and limiting competition through legislation.

Monopolies can exist only by virtue of government interference in the economy. By artificially and arbitrarily setting the terms of entrance into a market, the government sets the stage for corruption and predation.

Corruption is a regular effect of interventionism. An analysis of interventionism would be incomplete if it were not to refer to the phenomenon of corruption. —Ludwig von Mises, Human Action

Not so in a free market. Monopolies cannot exist in a laissez-faire free market capitalist political economy. Any time a corporation consolidates to dominate a given market, the consumer always has the option of withholding their patronage or of patronizing other media or of entering the market themselves to compete for the attention of the media consumer.

In a free market, entrepreneurs would own and operate radio stations entirely without the permission, or the control, of the government. The radio broadcast spectrum is not the property of a mysterious and shape-shifting "public." It is property like any other, and must conform to the rules governing property, like any other.

The spectrum is treated like a street fair with each vendor having his own claim to a space along the avenue. Other vendors must respect this private property and the freedom the vendor should have to make use of it as he sees fit, without interference from other booth owners. The government, in this case, must restrict the scope of its action to protecting the rights of the property owners.

If someone attempted to buy up all of the booths themselves, they would still have to provide products or services that meet with the utmost approval of the consuming public. If they do not, then this necessarily opens the door to competition; any competition. The uncompetitive owner would then have to cash in, or sell some of his booths to someone else who could better turn a profit and thereby salvage his investment. And profit, keep in mind, is the key indicator that a business is providing a value to "the public."

Media consolidation is a problem. But it is only a problem for socialism, not capitalism.

I advocate the free market approach to the airwaves.

Prohibition

"Congress shall make no law respecting an establishment of religion..."

Today -- Friday, December 5, 2008 -- marks the 75th anniversary of the repeal of Prohibition, which should be cause for general celebration around the country.

On October 28, 1919, the Volstead Act was passed by Congress, vetoed by President Woodrow Wilson, and then overridden by Congress on the same day. The act stated that "no person shall manufacture, sell, barter, transport, import, export, deliver, furnish or possess any intoxicating liquor except as authorized by this act".

The following ratification of a Constitutional amendment marked the beginning of a 13-year-long Era of Prohibition, lasting from January 16, 1920 to December 5, 1933.

[Note: Marijuana has been illegal for 71 years.]

In February of 1933, after a decade long battle against Prohibition, Congress proposed an amendment to repeal Prohibition (in the form of the Blaine Act) and on December 5, 1933, the nation ratified the Twenty-first Amendment, repealing the Eighteenth Amendment, making the Volstead Act unconstitutional, and restoring control of alcohol to the states.

Prohibition laws were the direct consequence of meddling religionists attempting to codify into law, and through the mob rule of democracy, their own peculiar moral values and thus impose them on all others through the coercive force of the federal government. The insidious and pernicious encroachment of subjective, faith-based moralities into the objective law of a secular and pluralistic free nation must continue to be resisted today and into the future.

...the illegality of drugs rests on a certain philosophic idea that is inimical to the founding principles of America and should not be defended or accepted uncritically. The idea that people do not have the right to their own bodies and that the state (or collective) should intervene to "guide" people in making the correct choices provides the philosophical underpinning for the drug laws. -Amesh A. Adalja, Letter to Pittsburgh Tribune Review, 12/3/08

Congratulations on this anniversary go to all of the thinkers, politicians, activists and commentators who made this repeal possible; most especially H.L. Mencken (1880-1956), a Baltimore libertarian journalist, humorist, and stalwart defender of liberty.

The most dangerous man, to any government, is the man who is able to think things out for himself, without regard to the prevailing superstitions and taboos. Almost inevitably he comes to the conclusion that the government he lives under is dishonest, insane and intolerable, and so, if he is romantic, he tries to change it. And even if he is not romantic personally he is very apt to spread discontent among those who are. -Mencken

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by Marion Elizabeth Rodgers | September 10, 2007
For much of the early 20th century, Mencken, aka the Baron of Baltimore, was the country's most famous pundit, inspiring both love and fear and sometimes an equal measure of both. As novelist Richard Wright noted, "He was using words as a weapon." His targets were only the biggest issues of his day: Prohibition, puritanism and censorship.

Lord, Deliver Us from Prohibition
H.L. Mencken (as "Major Owen Hatteras") | The Smart Set | 1920
The one page article is written in typical Menkenese and catalogs example after example of how prohibition is creating a worse society, not a better one; citizens of all stripes who would otherwise be judged as honest souls, are instead committing illegal acts and there seemed to be no end in sight to such behavior.

Is the U.S. a Christian Nation?
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Economics of Prohibition
Mark Thornton | 1991
The purpose of the following investigation is to improve our understanding of the origins and results of prohibition, and therefore indirectly to contribute to future policymaking, shifting it toward rationality.

Persuasion vs. Force
by Mark Skousen | 1992
Convincing the public of our message, that "persuasion instead of force is the sign of a civilized society," will require a lot of hard work, but it can be rewarding.

It's time to end drug prohibition
By Ethan Nadelmann | Pittsburgh Tribune-Review | December 14, 2008
Supporters of Prohibition blamed the consumers and some went so far as to argue that those who violated the laws deserved whatever ills befell them. But by 1933, most Americans blamed Prohibition itself.

Forbidden Thoughts from Mencken
Doug French | Mises Institute | 2/26/2009
Writes Menken, the common man has no interest in liberty: "he is not actually happy when free; he is uncomfortable, a bit alarmed, and intolerably lonely. He longs for the warm, reassuring smell of the herd, and is willing to take the herdsman with it."

Seven Trillion Dollar Bailout

So far, the government has taken these steps to interfere in the marketplace and prevent necessary market corrections (to the tune of $7 trillion):

SAVING WALL STREET

Term-auction facility: $1.6 trillion in loans to banks so far in exchange for otherwise unwanted collateral. The Fed increased its monthly auction limit to $300 billion in October, up from $20 billion when the Fed began the program.

Dollar swap lines: Unlimited dollars to 13 foreign central banks to provide liquidity to foreign financial institutions. The Fed lifted its cap after raising it to $620 billion in October from $24 billion in December.

Bear Stearns: $29 billion in a special lending facility to guarantee potential losses on its portfolio. With the lending facility, JPMorgan was able to step in to save Bear from bankruptcy.

Lending to banks: $70 billion lent on average every day to investment banks, after facility opened to non-commercial banks for first time in March. $92 billion a day to commercial banks.

Cash injections: $250 billion allocated to banks from $700 billion rescue package in exchange for equity stake in the financial institutions in the form of senior preferred shares.

Citigroup: $300 billion in troubled asset guarantees and $45 billion in cash-injections to prevent fourth-largest bank from failing.

Fed rate cuts: Down to 1% in October 2008, from 5.25% in September 2007.

SAVING MAIN STREET

Stimulus checks: $100 billion in stimulus checks made their way to 140 million tax filers to boost consumer spending and help grow the economy.

Unemployment benefits: $8 billion toward an expansion of unemployment benefits, to 39 weeks from 26 weeks. Some states must now offer 39-week benefits after an extension act was passed in November.

Bank takeovers: $15.5 billion drawn down so far from the FDIC's deposit insurance fund after 22 bank failures in 2008.

Rehab foreclosed homes: $4 billion to states and municipalities in assistance to buy up and rehabilitate foreclosed properties.

Student loan guarantees: $9 billion so far in government purchases of student loans from private lenders. Higher borrowing costs made student loans unprofitable for a number of lenders, many of whom stopped issuing the loans.

Money-market guarantees: $50 billion in insurance for money-market funds. The Fed then began to lend an unlimited amount of money to finance banks' purchases of debt from money-market funds. The Fed then agreed to purchase up to $69 billion in money-market debt directly. In October, the Fed said it would loan up to $600 billion directly to money-market funds, which was extended for six months in November.

Housing rescue: $300 billion approved for insurance of new 30-year, fixed-rate mortgages for at-risk borrowers. The bill includes $16 billion in tax credits for first-time home buyers. But lenders have been slow to sign on.

Deposit insurance: $250,000 in insurance for interest-bearing accounts, up from $100,000. The FDIC also issued unlimited guarantees on non-interest- bearing accounts and newly issued unsecured bank debt.

Consumer loans: $800 billion extended to consumer loan-backed securities, including $200 billion for assets backed by credit cards and car loans and $500 billion in mortgage-backed securities. The Fed will also buy $100 billion of Fannie Mae and Freddie debt to try to make loans cheaper.

SAVING CORPORATE AMERICA

Business stimulus: $68 billion in tax breaks to corporations to help loosen the stranglehold on businesses trying to finance daily operating expenses.

Fannie Mae, Freddie Mac: $200 billion to bail out the mortgage finance giants. Federal officials assumed control of the firms and the $5 trillion in home loans they back.

AIG: $152.5 billion restructured bailout, including a direct investment through preferred shares, a easier terms on a $60 billion loan, and new facilities meant to take on the companies exposure to credit-default swaps.

Automakers: $25 billion in low-interest loans to speed the industry's transition to more fuel-efficient vehicles.

Commercial paper facility: $271 billion in corporate debt purchased so far by the Fed since its so-called Commercial Paper Funding Facility opened. The Fed allocated $1.4 trillion for the program.

[Courtesy of CNN Money]

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Reuters | Dec 1, 2008

"Democrats in the House of Representatives likely will seek passage next month of an economic stimulus bill costing about $500 billion, a House Democratic aide said on Monday..."

I would support, instead, a three month moratorium on federal income and social security taxes.

Americans pay $101.6 billion per month in personal income tax and $65.6 billion per month in FICA tax, totaling $167.2 billion per month. A three-month tax holiday would equal $501.6 billion -- the same as the stimulus package but without the overhead.

The tax holiday would also relieve businesses of the burden of their contributions to the FICA tax; thereby boosting their revenue position and their ability to provide jobs and invest in production, however short-lived.

Rep. Louie Gohmert (TX) has even proposed "returning all 2008 income taxes to American taxpayers as a solution to boost the ailing economy, as he believes taxpayers, rather than the government, should be using their hard-earned money to choose the economy's winners and losers."

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RELATED

H.R. 7309 | December 9, 2008
To amend the Internal Revenue Code of 1986 to suspend employment and income taxes for the first two months of 2009, and for other purposes.