Tim Geithner’s Empty Cheerleading

August 4, 2010 06:28


“Welcome to the Recovery,” said the headline over an op-ed by Treasury Secretary Tim Geithner in the New York Times. At first we thought it must be a joke, maybe even a parody. It wasn’t.  What’s painfully apparent is that, if anything, the government’s hyperactive interventions in the economy have held it back. – IBD Editorial

IBD Editorials

Welcome, indeed. The very same administration that promised unemployment wouldn’t rise above 8% if we passed the $862 billion stimulus has dubbed the tepid economic rebound “recovery summer.” They seem to think they deserve credit for the mess.

“The combined effect of government actions taken over the past two years — the stimulus package, the stress tests and recapitalization of the banks, the restructuring of the American car industry and the many steps taken by the Federal Reserve — were extremely effective in stopping the freefall and restarting the economy,” Geithner wrote.

In fact, the economy’s “freefall,” as he put it, was stopped by the Fed’s essentially printing nearly $1.2 trillion in new money — and, starting in December 2008, holding interest rates at zero, so that banks could essentially mint profits by borrowing at no cost and round-tripping the money into Treasury securities at 3% yield.

What’s painfully apparent is that, if anything, the government’s hyperactive interventions in the economy have held it back.

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