"The central bank has come under attack for taking too many risks with taxpayer money and putting itself in a position to suffer losses. "
Thankfully, the risks paid off - now what?
I'm sure this means the treasury , congress, and Obama w...ill do the right thing and use the return on these risk assets, which were purchased with tax-payer money, to lessen the tax burden on the population.
To simply spend the money without even a thought of returning it to the tax payer would be wanton waste for a government so strapped for cash - not to mention bordering on outright theft.
@ Occupy wallstreet : You are all about 250miles off target... get to Washington; they are robbing you ( or at least the tax payers ) blind.
Anyone else pissed about this?
.
Agree with both of the above.
Our government can't be strapped for cash, as long the irrelevant debt limit is kept out of the picture. The government puts money into circulation and takes it out, ideally as necessary to control inflation. We aren't in the Bretton-Woods system anymore, people need to start recognizing that fact.
What are you talking about. Your argument seems baseless. Just because the government makes investments, even risky ones, does not create an obligation to return that money to tax payers vis a via lower taxes.
I don't know how the money will be used but I look at if from a high level perspective. There are revenues and expenses. Currently, our expenses are higher than our revenues. In some way or another this return on investment will offset that difference.
But to say the only use of this money should be its return to the public in the form of tax reductions is just plain wrong and unfounded by historical precedent.
you may very well be right by historical precedent; however to that i say fuck history.
First off, the government does not have money, nor does it make money. People, read citizens, have money - and we give it to the government,; what they do with it IS our business. We accept taxes because we trust the government to provide us services that are better managed on larger scale: ie defense, education (arguable), infrastructure, etc.
My point is this; if the federal government steps in and decides to use our tax dollars to buy up risk assets(not simply the next roll of g'ment debt in standard OMC style) because the conclusion reached is that without propping up the coked-out over-leveraged market, shit will go to hell for everyone. That conclusion itself is for another debate, but lets take it as given for the purposes of this argument.
Once the government uses tax money to prop up Citi/AIG/MBS, and just happens to make 10's of billions of dollars in the process the question needs to be asked - what are they going to do with the money?
We all learn that risk begets reward - so the first question is, who took the risk? The answer is: the taxpayer.
The next question is, who should benefit from the windfalls of these capital injections? The answer is the person taking the risk - again the taxpayer.
To that conclusion I personally think there are two ways to return that cash to the tax-payer.
1) a direct one of tax credit.
2) use the money to pay down debt
My only point is that to spend the gain on anything else would be a shady practice in any business, and we shouldn't accept anything less from the people who represent us in the Treasury.
So well done for the Fed writing the check.... but thats only half of a good deed done in my opinion.
I'm surprised more people are angry about this; I guess it might just be a symptom of how little we expect in terms of integrity from the federal government.
If not return the money to the tax payer either directly or through lessening the debt load; what would you suggest as a reasonable use of the cash?
I agree with your #2 sleepless, but no so much with the number one, our amount of debt is ridiculous and we need to use this gain to pay down debt, you could argue that paying off the debt would lead to lower taxes in the future but that is just speculation..
Paying off the debt would be pretty stupid since the US' borrowing costs are at a historical low (yield on inflation-indexed bonds is close to 0). Also uemployment is still very high, because of a shortage of demand. So in my opinion the government only has two options with the returns: 1) Spend it 2) "Give" it back eg. as a tax credit
Actually I think the argument for 1) is pretty good. Consumers are very likely to save a high percentage of the extra income and if they do spend it, there is a risk it will be spent abroad or on imports. What the US needs right now is spending to help unemployment, spending it on infrastructure seems fine to me.
The difference in the amount of money that reaches the economy with the two options you listed is pretty much 0. People will save it, the government will eat up what people save. There is no difference in the net effect on the economy. Persoally I think it needs to be returned, if it is spent it will be on a new government program that will never go away and will negatively affect the future expenduatures.
Sorry, but you are wrong on this (what do you mean by "government will eat up what people save"?) Saving will go to investment not government. There is actually a pretty big difference between tax cuts and government spending. Government spending has shown repeated times to be more effective in job creation that tax cuts (in the short run). I'm not a big fan of big government, but in the current situation with very high protracted unemployment and a disastrously large group of people who have been unemployed for a very long time, government spending, financed by borrowing, is the best cure.
This is exactly the type of thinking that has gotten the US into a mountain of debt. You think we need to spend more? We've tried that and it didn't work. Spend more? How long can people spend a dollar for every 40 cents the earn. You need a college degree to build a road nowadays. No, we need the government to stop distorting price signals in the marketplace.
Read some Austrian Economists instead of the funny pages.
Ye, i definitely need to abandon the mainstream economic theory, that is taught at most top-universities and turn to some fringe idea, who's followers mostly resemble a cult. Btw austrian theory would predict (and austrian economists have) that we should experience weimar-like hyperinflation right now, because the monetary base has tripled and governments are running large deficits. Mainstream theory says high inflation is unlikely as long as unemployment and GDP is way below the structural level. Guess who has been dead wrong and who has been spot on?
FYI, they are down in DC. They've been camped in McPherson Square for months.
op out of touch with reality about how taxes work
Government simply needs to shrink. All government jobs are paid for through tax revenue, which is revenue that could be saved, invested or used to buy things which would stimulate the economy.
The problem I have with the left or liberals is that they complain about government benefiting big business or how government needs to regulate things more, but don't realize that government causes the issue and then makes it worse with more regulations.
Regulations didn't stop the Gulf of Mexico spill, it doesn't stop waste and fraud and more regulation won't do it either.
And this bullshit that keeps getting parroted that "businesses want to be regulated" is utter non sense. They want regulation to keep competition out which is the exact think you don't want to happen.
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