On bailouts and bonuses

I must have missed the part where capitalism allows the government to create money out of thin air:

Saying that the recession continues to deepen, the U.S. Federal Reserve announced Wednesday that it would pump an extra $1 trillion into the economy by buying mortgage-backed securities and long-term Treasury issues.

It's hard to avoid snark and sarcasm when one realizes the utter ridiculousness of what is going on. I wonder what it's like to be the son or daughter of a Federal Reserve chairman. "Eat your breakfast, Jimmy. When you grow up you too can debase the currency and bring further ruin to the global economy." The lessons which will be repeated pounded into my poor reader's heads--if only to give a brief respite to the pounding within my own--are: that this system is not capitalistic; and that the inmates who run the asylum haven't the foggiest idea of what they are doing, and so have no possibility for success. Enjoy the ride.

On a related note, there has been a bit of a hullabaloo over the AIG bailout. It seems that a number of employees were planning on using the money for bonuses. The populace is enraged, and thus the Democrats, who continue to lead by following, are up in arms:

Talking tougher by the hour, livid Democrats confronted beleaguered insurance giant AIG with an ultimatum Tuesday: Give back $165 million in post-bailout bonuses or watch Congress tax it away with emergency legislation. Republicans declared the Democrats were hardly blameless, accusing them of standing by while the bonus deal was cemented and suggesting that Treasury Secretary Timothy Geithner could and should have done more.

In an age of agitated action, it is asking too much to expect our representatives to actually read the bills which rob the people of their hard-earned money to give to whomever Congress feels has more need of it. If AIG is behaving immorally, they are at least legally in the right. There is a lesson here about the importance of sober reflection before action. It's almost like that time the Congress rushed through the PATRIOT Act, and then lamely asserted that they didn't realize what the bill would be used to do.

On the one hand, it's absurd that money is being taken from the people to give to those who have proven to be abject failures. Bonuses are the sorts of things you get when you make money, not when malfeasance or incompetence causes the government to give you money to stay solvent. But if the righteous indignation remains directed at the employees of AIG, ultimately, it misses its mark. As Rich Lowry writes in his column: "The bonuses AIG wants to pay its employees are a pittance compared with the $170 billion it has received in government bailouts, a trifling .097 percent."

I'd like to see the population insist on the bailout money being returned from every single recipient, bonus or no bonus. Such a blatant redistribution of wealth is pure thievary, made worse by the fact that it won't prove beneficial to anyone but the recipients themselves. If there's a sanguine note on which to end this sorry episode, it's that the cowardly democrats are sufficiently scared of a popular revolt placing the republicans back in power that they might just act. Left for an exercise for the reader is the appropriate response to a system which places faith in the people's propensity to cajole their represntatives into doing right.