Thursday, November 4, 2010
Our Government Is Like a Plumber Trying to Fill the Bathtub by Pouring in More and More Water ... Without Plugging the Drain
The government is deploying all of its equipment to rescue the economy.
But rather than fixing the economy, the equipment is just getting swallowed up.
Ben Bernanke's answer to all of the water running out of the bathtub (high unemployment, falling home prices, slow growth, etc.) is to pour more and more water (easy money) into the tub (quantitative easing, zero percent interest rates, etc.)
Similarly, Geithner and Obama and Congress can throw all of the money at the giant banks through direct and hidden bailouts that they like, but - until the hole is plugged - nothing they do will work.
The water will just keep running away.
What's the hole that is swallowing up the economy? The failure to follow the rule of law.
The rule of law is the basis for our social contract. Indeed, it is the basis for our submission to the power of the state.
We are supposed to be a nation of laws, not of men. That's what humanity has fought for ever since we forced the king to sign the Magna Carta.