http://www.bloomberg.com/apps/news?pid=washingtonstory&sid=aU41A2nIChN4
The wise men of Washington keep finding more core beliefs that we have to give up. First it was free markets. Now it’s democracy.
The financial rescue may be the least popular big-ticket government program in history. If the U.S. Treasury decides it needs more money to keep the bailout going, it is anybody’s guess whether Congress would provide it.
As a result, Treasury and the Federal Reserve have been running what feels to this lifelong student of fiscal policy like a scam.
Many economists believe that helping financial institutions turn their less liquid assets into hard cash is a key step toward returning them to good footing. The best way to achieve that in a democracy would be for Congress to appropriate the funds to acquire the assets and for Treasury to borrow the money that it needs.
But Congress is unwilling to appropriate enough money, so Treasury and the Fed have cooked up a work-around: the Fed buys the assets instead. Since the Fed exists outside of the normal budget process, no permission from elected officials is required.
