This article is correct, but it is also an inside window into the fall of American conservatism. It is written in populist terms with some mythical conspiratorial elite and supposedly non-elected policy makers:
That is the deal the Federal Reserve has made on behalf of the public. It's the latest chapter in the socialization of risk and its corollary, moral hazard. Anyone who works long enough on Wall Street knows, at least subconsciously, that this is the way things work: if the going gets tough, a small coterie of unelected and mostly unaccountable officials in Washington will probably decide that your employer is too important to fail. In an effort to keep that from happening, wages, savings, fixed-income streams, and Social Security checks will be inflated away to "ensure the stability of the financial system."I agree that this risk shouldn't be socialised, and there was a time when US policy makers would let big companies fail without being bailed out, however this article serves more as insight into conservatism's lost nature. You can imagine a populist like Chavez railing against the government with the same language.
The supposedly unelected policy makers are not the apolitical hidden elite this article imagines. The US Federal Reserve is one of the more political reserve banks and is politically influenced. There was an article not so long ago of Bush himself persuading fed policy by sending a bunch of cuss-words down the telephone line.
It is populism at its worst, similar to Cheney's "deficits don't matter." They do, just not politically.
Populism from the current Administration and Congress is an easier cop out than enforcing an economic policy that punishes failed risk with economic failure. This darwinianism is how it is supposed to be. The Bush Administration and Congress are avoiding that by inflating their way out of economic difficulties.
The title of the article, "Papering over the problem" is absolutely correct. It is a bad policy. However it is not one from a hidden elite, or non-elected policy makers; the policy is inherently political.
