Writing about President Herbert Hoover's efforts to soften the blow of recession in the early 1930s, the Wall Street Journal's Greg Ip recently opined that the 31st president "Fell short because he wanted private-sector solutions when government money was needed." While Ip's economic analysis will be addressed in a bit, for now this notion of "Government money" rates singular attention.
In his attempt to indict the private sector's failure to stop what he deems crisis, Ip is aiming to distinguish between private and public money.
There's quite simply no difference between private and public money other than "Government money" is wealth taxed or borrowed away from the private sector.
To state what's rather obvious, governments only have money to spend insofar as the private sector is creating the wealth in the first place.
There's no such thing as "Government money." The money used by Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke to bail out banks, investment banks and carmakers was not evidence of some newfangled form of currency being put to work in order to save the economy.
In certain instances, federal officials chose to ignore the message of the markets with the money of others.
As for banks and investment banks, what makes them unique such that failure is such a non-starter? Can readers imagine how depressed Silicon Valley would be if federal officials had leaned against the message of the markets only to save Friendster, Webvan, and Solyndra? The Valley's strength is a certain effect of the bad being put out to pasture, yet we're supposed to believe reason must be suspended for financial institutions?
https://www.realclearmarkets.com/articles/2018/09/18/despite_what_pundits_say_theres_no_such_thing_as_government_money_103416.html
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