nah, you missed the point.
The nominal valuation of capital isn't the point. The fed is pumping up the money supply right now, but the value of the dollar (which is increasing right now, btw) and inflation (which is decreasing right now, btw) are not the current issues to worry about. THe big issue is the slack capacity.
federal bailaouts and federal spending are not crowding out ANYTHING right now, because there isn't anything to crowd out... there is additional excess capacity being built up every day (500k additional workers last month) as the economy seizes up. You don't have to oversell your point (as you have DRASTICALLY done) to point to potential problems from the govt intervening right now.... but one thing that is certainly NOT a problem, is the government squeezing private sector employment of resources out of the way. Not right now.
in the medium/long run? some problems.
```can we have ANY faith that the govt will reign excess spending back in when it should BEFORE the next upswing is very far underway? no definately not
``` will there be some benefits from "creative destruction" lost by the govt propping up a some industries. Yes, this will increase ineffciency in the next upswing by a little.
``` Can we trust the govt to "pick winners"? no, definately not (see last point)
``` Will there be counterproductive "rent seeking behavior"? yes, absolutely.....
and several more....
BUT the fact of the matter is that the econmy is RAPIDLY moving away from a full employment equilibrium. If treated with benign neglegt there will not just be creative destrction, but real and lasting destruction of wealth and projuctive capacity. Period. A little bit o business cycle is a healthy thing. A depression sucks ass.
and back to your point about the irony that when the government is trying to pump money into the system because nobondy is borrowing and nobody is lending ... but there is sooooo much money lookin gfor somewhere to go (to the govt) ...... this isn't irony. this is THE point. borrowere and lenders aren't lending to each other, they are running for cover, and govt securities are cover. it is not exess liquidity that is bien pushed out flowing BACK to the t-bills... it is ALL liquidity. THAT is the problem.
your final point. People have been hooked on caffine the last several years, so their heart rate is too fast. You seem to think a solution of slowing the heart rate to zero to kill the addiction is just a beautiful improvement. I don't.
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