Bernanke’s ‘helicopter drop’ gave $1.2 trillion to Wall Street banks

We found out this week that the Federal Reserve Bank’s secret lending to the blue chip banks of Wall Street in 2008 added up to $1.2 trillion. Not million. Not billion. That’s trillion.

Just in case you’re numb from hearing numbers such as this all the time lately, let’s put that into perspective. In 2008, the federal government brought in $2.5 trillion in all forms of revenue. So the government did the equivalent of handing out nearly half of every penny it collected from us and handed it to Wall Street banks.

The story told by the advocates of this financial insanity is that their actions “saved the economy” when the crisis hit, but what’s their evidence? The things they keep predicting don’t happen. The things they prescribe as solutions don’t solve the problems. So why do governments keep listening to these voodoo masters?

The economics profession has set itself up to be a science that knows all and can mathematically calculate everything. Many of its arrogant practitioners have intimidated others so badly that they meekly go along with whatever they’re told, no matter the track records of the practitioners.

Not all economists have shared this arrogance. Here’s what the great Austrian-school economist F.A. Hayek had to say about his profession:

“The curious task of economics is to demonstrate to men how little they really know, but what they imagine they can design.”

Picking up on the same idea, I recently heard economist William Easterly say (on an EconTalk podcast) that:

“The top-down people are happy to tell you what that course of action is [to solve various problems], even though they have no evidence and a miserable track record.”

The people pulling the strings of today’s economy pretend they know what they’re doing. They honestly believe they’re right. They’re not evil. They’re just arrogant and wrong. They’ve memorized their incantations and they have an internally consistent system that has their complete confidence. The only minor problem is that the premises of the system are wrong and that the predictions and prescriptions don’t work in the real world.

Most of us have rejected voodoo religions. It’s time for all of us to reject voodoo economics.