David Stockman takes apart a Wall Street Journal bozo who thinks the Fed deserves congratulations for its off-the-charts fiat debt creation response to Covid. From Stockman at David Stockman’s Contra Corner via lewrockwell.com:
Once upon a time, the Wall Street Journal supported a bevy of reporters who were no one’s fool and who evinced a decent level of economic literacy and respect for the institutions of free markets and sound money.
Obviously, no more. We were reminded again today that these financial journalists of yore have been replaced by scribes who dutifully transmit the statist propaganda that emits from the Eccles Building and from the elected and appointed Federales encamped throughout the Imperial City.
Thus, the WSJ’s in-house Fed shill, Greg Ip, recently saw fit to praise the $10 trillion bacchanalia of fiscal largesse ($6 trillion) and Fed money-pumping ($4 trillion) that has been stood up by Washington since March 2020.
According to the Wall Street Journal’s man on the policy beat –
…..this week we got proof of something that really went right: the economic policy response. The pandemic-induced shutdown was initially the worst to hit the U.S. economy since the Great Depression….And yet poverty, by its broadest measure, went down…..after taking account of government benefits such as stimulus checks, food stamps and tax credits, the share dropped to 9.1% from 10.5% in 2019.
The Federal Reserve gets some credit for rapidly slashing interest rates to near zero and intervening in markets to prevent the economic crisis from becoming a financial crisis. But once the Fed’s interest rate ammunition was exhausted, fiscal policy rose to the challenge. Congress ultimately authorized $5.9 trillion of emergency measures of which $4.6 trillion has been spent….
As important as the magnitude of this relief was the variety. Unsure of the most effective remedy, Congress rolled out several: forgivable loans for small businesses that kept their employees (the paycheck protection program or PPP), stimulus checks to almost everyone, unemployment insurance expanded to gig workers and topped up with an extra $300 to $600 a week, low-cost loans from the Fed and Treasury to medium and large businesses, aid to state and local governments.
Much of this was experimental, and the lessons learned may lessen the toll of future recessions. By depositing cash directly into household bank accounts, Treasury has learned how, with congressional approval, to deliver stimulus almost as quickly as the Fed. PPP has yielded new tools to preserve employer-employee bonds in the face of shocks, reducing wasted economic potential.
Nonetheless, the economy today is in a far healthier place than was imaginable in the spring of 2020. That’s worth celebrating.
What an unrelieved load of horse pucky!