Can You Cure An Addict By Giving Him More Drugs?

Only if you want to kill him. Caroline Baum discusses this very topic on Bloomberg. Imagine a doctor who, faced with an alcoholic, diagnosed more alcohol as a treatment. A doctor like that would be thrown out of the medical profession and rightfully so. Yet, our political leaders, when faced by a crisis created by years of easy money and debt, are prescribing that the cure will come from more debt and easy money. The market is naturally going through a correction caused and yet our political leaders act as if we have a god given right to never experience a recession or downturn.

Our years of profligate spending at both a governmental and individual level has come home to haunt us and the only fix is a painful return to thrift and saving. Instead, our leaders are trying to lower mortgage rates so that people can keep buying houses which only serves to artificially inflate prices. They are attempting to force banks to lend to people so that we can go on buying things we can’t afford. They are flooding the market with money in an attempt to get the economy going again but this can only delay the inevitable and make it much, much worse when we finally have to go through some real day of reckoning.

I think once all this cheap money the government is creating hits the market, we’re going to see some very serious inflation followed by a crash much worse than what we have experienced this year. It’s sad that we don’t have enough serious leaders to step up to the plate and say that we had our cake and ate it for far too long and now is the time to pay the piper. Instead, we’re only prolonging the inevitable.

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