Money Madness Made More Miserable by Meddling Morons

Like that alliteration, DID YOU?

Here's the op-ed. Blurbtastic bit here by the author, a Yale professor:

Despite all the hard work and good intentions on the part of our public officials, when economists and historians look back on the current financial crisis they are likely to conclude that government intervention prolonged and deepened it. In particular, officials at the Federal Reserve, the Securities and Exchange Commission and the Treasury Department are to blame for publicly losing confidence in the very economic system they are supposed to protect.

The Fed, the Treasury and the SEC appear to be in a state of panic. A crisis mentality led the custodians of the U.S. capital markets publicly to jettison their lifelong commitments to the capital markets in favor of a series of short-term regulatory quick fixes. Even more troubling, for the past several months the doyens of U.S. fiscal and monetary policy have ignored the most fundamental principle of central banking, which is that the primary responsibility of central bankers is to promote stability and to maintain confidence in the capital markets. Our central bankers appear to have suddenly lost confidence both in their own abilities and in the standard tools of fiscal and monetary policy.

The original Treasury plan -- which called for the transfer of virtually unlimited taxpayer dollars and unlimited spending discretion to Treasury with no judicial or congressional oversight -- sent a very bad signal to the markets. Instead of restoring confidence, this approach to the crisis instilled more fear and panic in the markets.

Well, DUH.

This is not so much about the specific actions taken but the image projected. Bailout-palooza aside, it's the "we're going to die!!!" panicky air of DC that's making confidence evaporate like a snowball in hell.

Oh, and speaking of hell, notice that the opening line of the piece speaks of the government's "good intentions." Surely I don't need to finish the thought.

UPDATE: Here is a related piece from Canada. Headline? "When Panic Strikes Governments."

Depressingly accurate observation: "Yesterday, it looked like the rate of panic in governments exceeded the panic in the markets."

More as the article looks at the monetary madness in the US, UK, and Canada:

Do massive influxes of government cash -- to be borrowed, taxed or inflated out of central banks -- actually improve confidence in a financial system? Or do they foment fear and a greater sense of alarm and instability? Nobody knows the answer, but when governments set about to inflate, spend and tax their way out of what is seen as a crisis, the outcome is even more unpredictably dangerous than the problem being solved.