Bernanke’s law: When in doubt, throw debt

A guest post from Constantine von Hoffman, a veteran business journalist who writes the blog CollateralDamage.biz, a humorous look at marketing, business and his dog.

The Fed has announced it will now buy commercial paper from money market mutual funds and endorsed the idea of another economic stimulus package. Far be it from me to turn up my nose at free money. I could use a handout “¦ I mean stimulus check as much if not more than most of Wall Street. But I am disturbed that these efforts are in keeping with previous Bush Administration policy to never have a clue how something ““ like a war or a however many bailouts there will be ““ will be paid for.

Throwing debt at everything makes me miss the days when conservatives would mock liberals for wanting to solve problems by throwing cash at them. That was back when the nation had a debt it was possible to imagine paying off and we could count on the GOP to ask questions like, “Where’s the money coming for that?” (Occasionally a renegade Democrat would also ask this question. Sadly, Bill Proxmire has shuffled off this mortal coil just and no one has risen to take his place ““ on either side of the aisle. Proxmire, was Democratic senator from Wisconsin most famous for initiating the Golden Fleece Awards which identified wasteful government spending. During his last two election campaigns in ’76 and ’82 he refused to take any contributions ““ spending less than $200 on each. His campaigns consisted mostly of standing at the entrance to a state or county fair or a sporting event and saying, “Hi, I’m Bill Proxmire.” But I digress”¦)

I have absolutely no idea whether or not buying this commercial paper or giving checks to you and me will do any good in slowing or stopping the progress from recession to depression. They may. We are in uncharted waters with the economy. What I do know is that nothing whatsoever has been proposed that will pay for any of this. Nor is there yet any talk in the capitol of how we as a nation are going to rebuild our capital by encouraging saving.

I was watching a collection of Disney cartoons from World War II recently. The thing that struck me the most about them was the emphasis on how we should all do our part. That took the form of everything from donating bacon grease and metal to buying war bonds to help pay for the war. Wow. What a concept. Buy a bond to help pay for something and earn a guaranteed return. I wish we had something that cutting edge now.

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