Where DID that Trillion Dollars Go?

by Don Boudreaux on September 3, 2009

in Current Affairs, Monetary Policy, Not from the Onion, Stimulus

Persons with an abiding faith in the goodness and necessity of an economically intervening government will find all sorts of excuses to explain why the information revealed in this 5+ minute-long video is either not so important or irrelevant as a basis upon which to generalize about the goodness and necessity of an economically intervening government.

In contrast, persons who are realistic about the human nature and concentrated power will understand what a serious indictment this video presents.

(HT Walter Williams)

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joenorton September 3, 2009 at 2:25 pm

My favorite part:

Alan Grayson: If you’re not in charge of investigating that, then who is?

Fed Inspector General: We actually… we have responsibility for the federal reserves programs and operations audits, to conduct audits and investigations in that area. Umm. In terms of whose responsible for investigating…Would you mind repeating the question one more time?

E. Barandiaran September 3, 2009 at 3:12 pm

It’s not funny. It’s just a reminder of how easily people like Ben Bernanke when in a position of power can become a dictator. It’s hard to know the extent to which he’s not complying with the law, but certainly a minimum standard of decency includes the duty to report back to those that entrusted him with so much money. He should not be reappointed until he can explain every dolar he has spent and is spending.

Matt September 3, 2009 at 4:04 pm

The whole idea behind TARP was to “pump” money into the economy. Where was the money to be pumped to? Some banks and some places and wherever, really, as long as it got out into the economy. Didn’t Keynes say something about how during a recession the government should pay people to dig holes and then fill them back up?

Why worry that the Fed lost a trillion dollars when that was the point to begin with.?

Justin P September 3, 2009 at 8:07 pm

One of the more nonsensical things Keynes said for sure. I’m sure if Keynes were around today he’d prefer the Helicopter approach.

Here’s something to think about; in order to stave off long term inflation, Heli-Ben said he will soak up all those excess reserves right? Well how can he soak them up if he doesn’t know where it is in the first place?

Anonymous September 3, 2009 at 8:32 pm

“Well how can he soak them up if he doesn’t know where it is in the first place?”

And how can he soak it up if the bulk of it is in a form (like the Fed’s purchase of toxic assets) that the Fed cannot liquidate?

Even Volker was prepared to let inflation fly if President Carter hadn’t given him permission to attack it. There is plenty of reason to believe Bernanke won’t or can’t control impending inflation.

Justin P September 3, 2009 at 8:40 pm

70′s style stagflation? That’s what I’m thinking, the jobs report tomorrow isn’t going to be pretty.

Anonymous September 3, 2009 at 8:26 pm

“Pump” is a nice word, isn’t it. Gives a visual connotation that people think they understand. Keynesians picture shifting lines on their modified IS/LM plots. And all of it is completely divorced from reality.

In reality, the closest pump analogy is one where you are spending your limited time trying to save your sinking boat by pumping water from the front of the boat to the back of the boat.

Anonymous September 3, 2009 at 4:24 pm

The unscrupulous or incompetent businessman — even if he only comprises 1% of all businessmen — is held out as proof that the free market is “untrustworthy” and must be “overseen” by “regulators”. But a virtually unlimited number of screw-ups by those regulators — and screw-ups of massive proportions — is never taken as proof that such regulation is “untrustworthy”.

Anonymous September 3, 2009 at 4:55 pm

Bad day for her. She clearly doesn’t know how to handle herself. It is a travesty what is happening at the Fed, but another spokesperson for IG would’ve confidently asserted “The numbers you give are not from our office. A thorough investigation is actively underway. This is our highest priority. We are going to get to the bottom of it. You will be the first person I notify when we conclude our exhaustive report.”

That is, “Blah blah blah” can be presented in very different ways to very different effect.

Justin P September 3, 2009 at 8:01 pm

If were are lucky, Helicopter Ben will turn out to be as good to as as John Law was to France.

Anonymous September 3, 2009 at 8:18 pm


Here is graphic demonstration of where you fit in in the grand scheme of government.

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