Commentary on the Bloomberg article revealing the $1.2 Trillion that the FED gave to the banks
While Bloomberg has done a tremendous job of digging through 29,346 pages of FOIA data, its discovery is not at all surprising: that Wall Street's (not to mention the rest of the world's) biggest banks received a total of $1.2 trillion in previously secret Fed loans, in addition to the trillions in public backstops and loans from the US Treasury. As a reminder, "denominated in $1 bills, the $1.2 trillion would fill 539 Olympic-size swimming pools."
The best summary of this ongoing collusion between the Fed and Wall Street, in which it once again for the nth time becomes clear that all the Fed cars about is making sure its banking masters are never impaired, is from the article itself: "Even as the firms asserted in news releases or earnings calls that they had ample cash, they drew Fed funding in secret, avoiding the stigma of weakness." And there you have it: everything that come out of Wall Street is and has always been a lie: either courtesy of 30 years of great interest rate moderation, in which only cheap money adds to banks' top and bottom lines, or due to the Fed making sure the same banks never suffer a dollar loss when central planning fails, such as it does increasingly often lately (and forget about 10(b)-5 violation charges coming from the corrupt regulators: after all they are all in bed together).
That Morgan Stanley, Dexia and Citi are, and have been since 2008, dead men walking, is by now known to all financially literate readers: additional confirmation can be found in the Bloomberg article, which we won't paraphrase because it has all been said over and over. That said, Bloomberg has done a great visual interactive chart summary of who got what, when, how much, over peak and average metrics and so forth. We urge readers to play around with it (don't worry, it won't break the banks; and if it does the Fed will secretly bail them out again) and every time they consider putting money into our "solvent" financial system.
You really need to look at the chart linked in R1, but here's the first part of the original article---
Wall Street Aristocracy Got $1.2T in Loans
Citigroup Inc. (C) and Bank of America Corp. (BAC) were the reigning champions of finance in 2006 as home prices peaked, leading the 10 biggest U.S. banks and brokerage firms to their best year ever with $104 billion of profits.
By 2008, the housing market%E2%80%99s collapse forced those companies to take more than six times as much, $669 billion, in emergency loans from the U.S. Federal Reserve. The loans dwarfed the $160 billion in public bailouts the top 10 got from the U.S. Treasury, yet until now the full amounts have remained secret.
Fed Chairman Ben S. Bernanke%E2%80%99s unprecedented effort to keep the economy from plunging into depression included lending banks and other companies as much as $1.2 trillion of public money, about the same amount U.S. homeowners currently owe on 6.5 million delinquent and foreclosed mortgages. The largest borrower, Morgan Stanley (MS), got as much as $107.3 billion, while Citigroup took $99.5 billion and Bank of America $91.4 billion, according to a Bloomberg News compilation of data obtained through Freedom of Information Act requests, months of litigation and an act of Congress.
%E2%80%9CThese are all whopping numbers,%E2%80%9D said Robert Litan, a former Justice Department official who in the 1990s served on a commission probing the causes of the savings and loan crisis. %E2%80%9CYou%E2%80%99re talking about the aristocracy of American finance going down the tubes without the federal money.%E2%80%9D
Bottom line, please. What are you saying?
Is my math wrong or would 1.2T equal giving every man, woman and child in this country $4,000?%0D\
If we just give it to adults, it''s something like $7,000 a person.%0D\
That would have been money better spent.
No shit, R5. If all of the money used to bail-out and backstop (no official numbers can be calculated, but $12-15T is the general estimate) these banks, you could have given every person in the US around $50,000 each. Instead, we are on the hook to pay for it, with interest (that goes to those same goddamn banks) for the next few decades. \
Anyone who doesn''t realize that Obama is as big a criminal as Bush was is willfully ignorant.
R6, this stuff happened under Bush, but you''re blaming Obama?%0D\
And the "act of congress" that allowed us to know this previously secret stuff happened under Obama and a Democratic congress...%0D\
Seriously, why do weak-minded fools like you always just LEAP to blaming Obama for everything, even when it''s clear that things happened prior to Obama''s Presidency? %0D\
OP/R6 is right. \
The fed gives out $16 TRILLION. Meanwhile they want to raise the retirement age to 70, cut the social security that we paid into because they stole it, cut Medicare, and have made sure all of the jobs are gone for good.
Trolldar reveals that you''ve posted endlessly in economic threads about banishing the Fed, buying gold and guns, splitting the country into 50 mini-Feds, etc. etc. etc. etc. etc.\
While I appreciate the head''s-up on the recent Fed audit, given your clinically insane Libertarian spew on economic matters, why should bother to pay attention to anything you have to say?
R7, I didn''t blame Obama, as any literate person can see in the phrase "Obama is as big a criminal as Bush". They''re both tools of the banksters. \
Stalker at R9, give yourself a gold star, then try to learn a little about economics, or else you''re just a tool of the big banks. \
Can you disagree with what I''ve posted?
Republicans = thieves and robber barons who work for corporations and have harmful social agendas.\
Democrats = thieves and robber barons who work for corporations and have more inclusive social agendas.
You guys know this isn''t "tax money," don''t you? It''s monopoly money. They just print it up. What a country, as Yakov Smirnoff used to say.
If I wanted to learn something about economics, why in the hell would I listen to a Libertarian? They''re the Scientologists of economics.
R10, I don''t take economic lectures from ignorant libertarian fucktards who actually think "supply-side/trickle-down" works.%0D\
And R11, you need to modify the Democrats line to say "half owned by theves and robber barrons". AKA the Blue Dogs. There are some legitimately un-owned Democrats out ther. %0D\
There used to be some unowned Republcians too, but not really any more. They''re owned lock stock and barrel.%0D\
R14, your characterization of libertarian economics as "supply side trickle down" just shows your utter ignorance. \
If you think there are more than 5 unowned Dems, you''re a moron to boot.
On the bright side, R14, your use of "libertarian fucktards" is spot-on.
Boys, boys, you''re both pretty.
Obama, Barney Frank and Chris Dodd all belong in jail. They recieved the most money from these companies. Instead many of you have tried to turn them into idols...they are crooks IMHO!
R19, I believe you misspelled "IMHO". It should be IMBCO. In your batshit crazy opinion.
R19, add Bohner, Bush, Cheney, Perry, Cantor and a few hundred others to that list and you''ve got a start.
Exactly R21. Republicans committed 95% of the crimes in Congress and 99% of the crimes in New York and Greenwich, CT
And Charlotte NC
[quote]No shit, [R5]. If all of the money used to bail-out and backstop (no official numbers can be calculated, but $12-15T is the general estimate) these banks, you could have given every person in the US around $50,000 each. Instead, we are on the hook to pay for it, with interest (that goes to those same goddamn banks) for the next few decades.\
You need to look up the word "loan." The money has been repaid with interest. No one is "on the hook for it." \
You also need to realize that $12 trillion figure would work like this: If a bank had a line of credit, every temporary draw is counted, even if it is repaid. So the bank may never have borrowed more than $10 billion, but if it used that credit ten times, you''d say they "took" $100 billion in taxpayer money when in reality they took nothing and paid the taxpayers interest.
R24, a fraction of a percent of the money has been paid back. A few billion out of multi-trillions is a drop in the bucket. Do you even read anything more than the headlines, or the pro-bank propaganda?\
Why do you idiots defend the banks?\
R22, the Dems have been just as complicit in these financial crimes as the Reps. Look at the donations, sponsored bills, and weaseling defenses from Obama, Pelosi, Reid, etc.
Does Perry know this? Is this what he was talking about?%0D\
Unfuckingbelievable! Did Congress know this? Is this why they played chicken with Congress over the debt ceiling?%0D\
This is really bad.
All of the money has been paid back. Your posts show profound ignorance of the banking system and a desire to score political points using that ignorance\
If you use a credit card and charge $1000 each month, paying off the full balance, at the end of the year would you say you "took" $12,000? Or would you say you never borrowed more than $1,000?
[quote]Why do you idiots defend the banks?\
We''re [bold]NOT DEFENDING THE BANKS[/bold], you fucking moron. We''re pushing back against your wilfull ignorance.\
You lack basic reading comprehension skills, not to mention your complete ignorance of the basic functions of ecomonics, banking and finance. Insisting that anybody who questions your ignorance is obviously a tool of the bankers just adds to your pathetic ignorance.
Welfare for the rich and nothing for the needy.
A chicken in every pot.
R28, it is you that lacks skill in comprehension, since you obviously believe everything that you read in the WSJ and hear on FOX news.
R27, if you borrow $1,000 from a bank (the gov) and in return give them an asset that WAS worth $1,000, but since you failed to make sure it was a good investment and is actually worth $10-50 AND they accept it because they know you'll give them a few hundred bucks under the table for their re-election, since "hey, it's not MY money", then you haven't repaid the loan, you've ripped the stockholders (taxpayers) off. That's why the banks claim they repaid the money- they gave the FED trillions in toxic assets, and in return got cash. Dig a little deeper than the headlines, honey.
If you think these banks, that are on the verge of bankruptcy AGAIN, actually repaid, in cash, the money that was given to them by the FED, then you're a gullible fool. You need to read more than USAToday and NYTimes OpEds by Paul "I've been wrong about everything the last few years but I've got a fuckin' Nobel Prize so shut up" Krugman to understand the depths of this current financial crisis.
I'll bet you two even believe that the 2008 recession ended, since the gov't and the talkingemptyheads on TV and the newspapers said so, and that this little "double-dip" is just a bump in the road. Get your head out of your ass and look around- unemployment (when calculated the way it was in the 30s) is nearly 20%, inflation (when calculated the way it was in the 90s) is nearly 10% a year, household wages (when controlled for inflation) are lower than they were in the 70s and the stock market (once again, when controlled for inflation) is lower than it was in 1993! The banks, in collusion with their lackeys in the White House and Congress, have sucked trillions of dollars out of the economy for decades, and laugh at you while they take their private helicopters to their weekend summer home in the Hamptons.
One last thing- gold hasn't "risen in price" (nearly 700% in 10 years) it's just that the dollar, and the euro, the yen, the pound, the franc have all devalued against it because the central banks have printed more and more of them each year to feed to the fatcats on Wall St, who dutifully give a few crumbs of it back to their servants in Washington DC so they'll keep writing laws to protect them.
You two remind me of a saying- If you weren't so stupid I could explain to you how stupid you are, but you are simply too stupid to comprehend how stupid you are!
[quote][R7], I didn''t blame Obama, as any literate person can see in the phrase "Obama is as big a criminal as Bush". %0D\
How is that not blaming Obama?%0D\
Regardless, it''s an utter lie to suggest that Obama is even in the same category as Bush. Your agenda is showing in your completely inability to acknowledge simple reality.%0D\
[quote]You two remind me of a saying- If you weren''t so stupid I could explain to you how stupid you are, but you are simply too stupid to comprehend how stupid you are!\
Funny, I''ve always thought the more often a person calls someone who thinks he is full of shit "stupid," the more likely that person is a moron. Thanks for the confirmation.
Shorter R33: "I know you are, but what am I?"%0D\
Girls, you''re BOTH stupid!%0D\
Brilliant, R33. Your logic is flawless- that PhD from Harvard sure has been put to good use! I notice you don''t refute any of my points, but maybe that''s just because I''m not as smart as you. \
R32, if you can''t see that Obama is just as corrupt as Bush, then you are simply blinded by your partisan loyalty. Even a large minority of Dems now admit that he has been a total disappointment, selling out to the banks and big businesses, continuing the war in Iraq & Afghanistan as well as starting them in Libya & Syria, selling out to the insurance lobby with his health care reform...shall I go on? My God, he''s a Chicago Democrat- that''s virtually a synonym for corrupt!
R28, first, read R31.%0D\
Next, tell us where these banks got ALL that money to pay us back so quickly.
[quote]I notice you don''t refute any of my points, but maybe that''s just because I''m not as smart as you.\
R24/27/33/35- are too!\
I decided to trolldar you, and I see that you were the the poster that asserted that the money was "paid back with interest" yet you cannot refute the facts in R31. Is it because you didn''t know that the banks used financial sleight-of-GAAP to make their claims, or were you just making things up based on your poor understanding of the situation?
Thanks, R38- I''m not used to having defenders! Wanna make out?
R31, blushing at being so forward with a boy!
[quote][R32], if you can''t see that Obama is just as corrupt as Bush, then you are simply blinded by your partisan loyalty%0D\
I have no personal or partisan loyalty to Obama. I''m simply stating a fact. Bush is far, far more corrupt. They''re not even on the same planet of corruption.%0D\
To claim they''re "just the same" is just blindly ignorant and laughably false.%0D\
Well, R39, if you''re so smart then why don''t you explain how banks that are so deeply underwater that they are still borrowing billions from the FED each month got the cash to repay the "loans" they got from TARP? Hmmmmmmmm...\
[quote]Is it because you didn''t know that the banks used financial sleight-of-GAAP to make their claims, or were you just making things up based on your poor understanding of the situation?\
Did you read the Bloomberg article?\
[quote]The Fed has said it had %E2%80%9Cno credit losses%E2%80%9D on any of the emergency programs, and a report by Federal Reserve Bank of New York staffers in February said the central bank netted $13 billion in interest and fee income from the programs from August 2007 through December 2009.\
%E2%80%9CWe designed our broad-based emergency programs to both effectively stem the crisis and minimize the financial risks to the U.S. taxpayer,%E2%80%9D said James Clouse, deputy director of the Fed%E2%80%99s division of monetary affairs in Washington. %E2%80%9CNearly all of our emergency-lending programs have been closed. We have incurred no losses and expect no losses.%E2%80%9D
The Fed exists to make short-term loans to banks in need of liquidity. That means they are temporarily short of cash because their assets are longer term than their liabilities. It doesn''t mean they are insolvent. They repay these loans when they have the cash from their normal business operations.
"We have incurred no losses and expect no losses"\
Then why don''t the mark-to-market the assets that they were given in exchange for the cash? Couldn''t be because they''re worth 5-10 cents on he dollar, could it?\
Some people are so gullible and credulous.
R45, then why are they holding trillions of dollars in illiquid assets FOR THE FIRST TIME IN HISTORY?
But, R45, the banks aren''t lending and, therefore, are not doing their normal business. Oh, wait, they are incestuously lending to other rich companies, right? Fuck the people should be tattooed on all of their foreheads...and, for good measure, all the Congressperson''s foreheads as well.
[quote]Then why don''t the mark-to-market the assets that they were given in exchange for the cash? Couldn''t be because they''re worth 5-10 cents on he dollar, could it?\
Because the cash has been repaid.
R46, so I can understand when I explain it to the idiots in my family...are you saying that the "no losses" is due to them still valuing the exchanged assets at their previous bullshit value instead of their real value?
Banks always have illiquid assets. For example, a loan to a company that will be repaid over time. Or real estate. During the crisis, the amount of illiquid assets suddenly shot up because there was no market for mortgage-related securities. That did not mean these securities were actually worthless. But banks had to hold on to them and could not use them as collateral for cash. If the government had not provided emergency cash into the system, many firms would have collapsed due to a lack of credit.
[quote]are you saying that the "no losses" is due to them still valuing the exchanged assets at their previous bullshit value instead of their real value?\
No. I am saying "no losses" because the cash has been repaid.
R50, exactly. The banks are still holding trillions in debt that is still valued at 100% while the underlying value is far less, but the most "toxic" of those assets were exchanged for cash from the FED, which now has them on their balance sheet.
R49, the cash has not been repaid- quit repeating the same lie over and over- they did not repay with cash, they repaid with assets that had a face value of 1 to 1, but were worth 1/20th of the cash they were given. It's not that hard to understand!
R48, for the most part the banks are lending the trillions in excess reserves to the FED (although they are lending to powerful and politically connected companies) and the FED, for the first time in history, is paying them interest on their reserves higher than what they would get in interbank overnight lending, thus keeping inflation from REALLY exploding. It's a Rube Goldberg Ponzi scheme bigger than the world has ever seen, and when the juggler loses one ball the whole thing is going to make one hell of a mess on the stage!
R51, those "illiquid assets" are worth .05 cents on the dollar, so selling them would be suicide. Who would be stupid enough to buy a security at face value that was backed by subprime mortgages today? Only a moron...or the FED.
R52 is a goddman liar. They never sent a fucking penny in real cash to pay those back. Do you work in the PR dept for the FED or something? Goldman Sucks? Morgue Stanley? Shittybank?
And yet, R53, the entire world is still happy to lend money to the US Treasury at the lowest interest rates. We can believe everyone who actually has cash on the table is failing to understand what you and Rush, Ron Paul and Glenn say is happening or we can believe that you don''t know what you are talking about.\
If you can''t see that the price of gold is going through the same speculative bubble that real estate went through in the recent past, you are going to lose a lot of money when that bubble bursts.
No, I don''t R55. Do you work for Rush Limbaugh, Ron Paul or Glenn Beck or the gold dealers?
[quote]If you can''t see that the price of gold is going through the same speculative bubble that real estate went through...%0D\
All I want to know is when this bubble is going to burst so I can cash out this gold coin I''ve been sitting on for a decade. Every little bit helps.
When gas and milk are $10/gal you'll be glad you still have that gold coin.
The person at R59 was apparently paid to bump yet another Really old "the economy is failing" thread during the wee hours in hopes the topic's reemergence in the morning will help influence the election.
It's sad. The Republicrats are getting desperate.
The Federal Reserve has finally released a list of the banks that used LSAP, and no surprise the one with the most tentacles inside DC is by far the biggest user of taxpayer funded "free" money- Goldman Sachs.
It's no surprise that they only lost money for 2 days on trades in that quarter (since they have access to info from the government that other banks don't) and had 7 days where they made over $100,000,000 during trading hours.
If that doesn't illustrate how corrupt the Wall Street/DC nexus is, nothing will.
I am R59 and I have no desire to see Romney elected. He is just another empty suit (like Bu$h2 and Obama) and only bumped it so that intelligent people can see how giving the Federal Reserve reserve and Wall Street trillions of US tax dollars is destroying our country.
Partisan morons like you need to wake up and see that both parties are in the pockets of big business, and unless we dismantle the status quo (preferably by eliminating DC entirely and returning all the powers back to the individual states) they are going to destroy the country.
Perhaps one of the most startling and telling charts of the New Normal, one which few talk about, is the soaring difference between bank loans - traditionally the source of growth for banks, at least in their Old Normal business model which did not envision all of them becoming glorified, Too Big To Fail hedge funds, ala the Goldman Sachs "Bank Holding Company" model; and deposits - traditionally the source of capital banks use to fund said loans. Historically, and logically, the relationship between the two time series has been virtually one to one. However, ever since the advent of actively managed Central Planning by the Fed, as a result of which Ben Bernanke dumped nearly $2 trillion in excess deposits on banks to facilitate their risk taking even more, the traditional correlation between loans and deposits has broken down. It is time to once again start talking about this chart as for the first time ever the difference between deposits and loans has hit a record $2 trillion! But that's just the beginning - the rabbit hole goes so much deeper...
There are many reasons why the deposit hoard has continued to rise in the past 4 years, and according to the latest H.8 statement just hit a record $9.173 trillion as of December 12. This compares to $7.259 trillion in the week after the Lehman collapse: an increase of $1.9 trillion.
One contributing factor to this surge in deposits is the collapse in the Commercial Paper market (driven in big part due to the ongoing lack of counterparty faith as well as the ongoing Fed intervention in every possible market which has the paradoxical impact of eliminating confidence in the system and the desire by corporations to be able to fund themselves at a moment's notice come hell or high water) coupled with the unlimited insurance of various deposits courtesy of the government's Transaction Account Guarantee (TAG) program, which however will expire in 5 days, and which has made deposits the preferred pathway of preserving liquidity "dry powder" for both corporations and individuals.
Cont at link
So who is running the Fed and the banks? Can't we go after them for this shit?
R64, they run the courts.
Jon Corzine (fmr governor of NJ) stole billions last year, didn't even get a slap on the wrist, and has a new hedge fund.
The laws protect the ultra wealthy, and the bottom 99.9% pay for it.
I think the thread at the link will be deleted, or closed, since I called out the fascists that were defending the Iraq war and the bank bailouts.
Pro Publica has been maintaining a list of bailout recipients, updating the amount lent versus what was repaid.
far, 938 Recipients have had $607,822,512,238 dollars committed to
them, with $553,918,968,267 disbursed. Of that $554b disbursed, less
than half — $220,782,546,084 — has been returned.
hear pronunciations of how much money the TARP is making, check back
and look at this list. It shows the TARP is deeply underwater.
The Troubled Asset Relief Program (TARP) is a program initiated by the US government, funded by taxpayers, in October 2008 to bail out the banking and housing sector after the 2008 financial crisis. Due to the program's complexity and "repayment" schemes, there has been different estimates of what TARP would ultimately cost.
We looked at the various TARP estimates in August, 2011 trying to shed some light on two very fundamental questions -- (1) Where has Uncle Sams' bailout money gone (2) Has the money been paid back yet. At that time, we found some published non-government sources of the "amount outstanding" on TARP ranging from $239 billion tracked by Pro Publica to NYT's $480 billion (CNNMoney data came to $357 billion). And there's also one jaw-dropping outlier--$1.5 trillion--estimated by the Center for Media and Democracy (CMD)
Even after taking into account of government sources such as Office of Management and Budget (OMB), the Congressional Budget Office (CBO), the U.S. Treasury Dept. is probably the only one repeatedly preaching the "profitability" of TARP. After proclaiming that "Repayments to Taxpayers Surpass Tarp Funds Outstanding." in June 2010, Treasury came out with this update earlier this month:
"Overall, the government is now expected to at least break even on its financial stability programs and may realize a positive return. Treasury’s TARP investments and overall stake in AIG, purchase of mortgage-backed securities, and Money Market Fund guarantee program are each currently expected to realize an overall positive return for taxpayers."
A week later, along came a congressional report by SIGTARP (The Office of the Special Inspector General for the TARP) pouring ice water on the seemingly overly optimistic Treasury:
"It is a widely held misconception that TARP will make a profit...... As of March 31, 2012, $470.1 billion is obligated to TARP programs.6 Of that amount, $414.6 billion had been spent and $50.2 billion remained obligated and available to be spent. Taxpayers are owed $118.5 billion as of March 31, 2012.
The table below from SIGTARP report lists the most recent TARP program estimates from three agencies.
how will this affect me? not a thing.
so tired of all these gloom and doom.
Do you live in NY/NJ? Did you experience "Sandy"?
If we eliminated all government spending except SS/Medicare/interest payments we would break even. So, our government is spending WAY more than us serfs...I mean taxpayers earn.
That cannot continue, and when it breaks down, and the economy gets REALLY shitty...well, do you think the government is going to protect you?
The socialist policies we now have are designed to neutralize the money-hoarding going on among the one percent.
If they don't spend it, the Fed will print it and take it from them.
That's the lesser of all evils at this point. Print baby print.
Please tell me you're joking. The money the Federal Reserve prints goes to the top .01% first, and they keep most of it. Do you think the $4Trillon they've printed since 2008 has ended up in the middle class? No, 99% is in the hands of the .01%.
Just a friendly bump,
That noted Freeper Matt Taibbi, from Rolling Stone, shows how the government fucked the little guy to give to the government.
It has been four long winters since the federal government, in the hulking, shaven-skulled, Alien Nation-esque form of then-Treasury Secretary Hank Paulson, committed $700 billion in taxpayer money to rescue Wall Street from its own chicanery and greed. To listen to the bankers and their allies in Washington tell it, you'd think the bailout was the best thing to hit the American economy since the invention of the assembly line. Not only did it prevent another Great Depression, we've been told, but the money has all been paid back, and the government even made a profit. No harm, no foul – right?
It was all a lie – one of the biggest and most elaborate falsehoods ever sold to the American people. We were told that the taxpayer was stepping in – only temporarily, mind you – to prop up the economy and save the world from financial catastrophe. What we actually ended up doing was the exact opposite: committing American taxpayers to permanent, blind support of an ungovernable, unregulatable, hyperconcentrated new financial system that exacerbates the greed and inequality that caused the crash, and forces Wall Street banks like Goldman Sachs and Citigroup to increase risk rather than reduce it. The result is one of those deals where one wrong decision early on blossoms into a lush nightmare of unintended consequences. We thought we were just letting a friend crash at the house for a few days; we ended up with a family of hillbillies who moved in forever, sleeping nine to a bed and building a meth lab on the front lawn.
An in depth look by a former Federal Reserve analyst at how the government fucked the bottom 99%.
The link is full of technical jargon, but an educated layman can see how the government bailed out the banksters and screwed "the little people".
"Noted Freeper Matt Taibbi"??? Now I know you're completely fucked in the head.
And by the way, anybody who calls Matt Taibbi a conservative is a fascist. My new definition.
Sarcasm+irony x you=zero.
Anyone who doesn't know Taibbi is as far left liberal as Mao, or Hitler, or Moussolini is too ignorant to comment.
Your total inability to understand what fascism is- "public/private partnership" is the best description - isn't surprising considering how incapable you are of detecting sarcasm and irony.
Why don't they do this?
Krugman shows that it's the right thing to do!
Credit expansion is the governments foremost tool in their struggle against the market economy. In their hands it is the magic wand designed to conjure away the scarcity of capital goods, to lower the rate of interest or to abolish it altogether, to finance lavish government spending, to expropriate the capitalists, to contrive everlasting booms, and to make everybody prosperous.
"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."
This first stage of the inflationary process may last for many years. While it lasts, the prices of many goods and services are not yet adjusted to the altered money relation. There are still people in the country who have not yet become aware of the fact that they are confronted with a price revolution which will finally result in a considerable rise of all prices, although the extent of this rise will not be the same in the various commodities and services. These people still believe that prices one day will drop. Waiting for this day, they restrict their purchases and concomitantly increase their cash holdings. As long as such ideas are still held by public opinion, it is not yet too late for the government to abandon its inflationary policy.
But then, finally, the masses wake up. They become suddenly aware of the fact that inflation is a deliberate policy and will go on endlessly. A breakdown occurs. The crack-up boom appears. Everybody is anxious to swap his money against 'real' goods, no matter whether he needs them or not, no matter how much money he has to pay for them. Within a very short time, within a few weeks or even days, the things which were used as money are no longer used as media of exchange. They become scrap paper. Nobody wants to give away anything against them.
It was this that happened with the Continental currency in America in 1781, with the French mandats territoriaux in 1796, and with the German mark in 1923. It will happen again whenever the same conditions appear. If a thing has to be used as a medium of exchange, public opinion must not believe that the quantity of this thing will increase beyond all bounds. Inflation is a policy that cannot last.