That the government can’t create wealth but can merely redistribute it is a tautology

My statement was not a tautology. At best it jumped over a series of views and beliefs to encapsulate them. I think very much that it added to the conversation. If the govt cannot create wealth, but can redistribute it, then by doing so it is picking the winners. You can call it a bridge if you like. This is always true of govt policy, especially true when money (large sums) is involved. Normally the govts interference is limited to enforcing a series of rules that govern our collective marketplaces. However at this time those market places have broken down, due rightly to to much leverage (debt) and too much fraud. Instead of allowing the painful de-leveraging, which ultimately must occur, the govt is attempting to either slow or even stop the process. By re-distributing the pain from those who created it, to those who did not. It is creating extremely perverse incentives. Forcing otherwise healthy institutions to compete with those that are unhealthy and thus more likely to “win” economically because they have govt backing. It also forces those who exhibited correct behavior to foot the bill, which is of course, my ox being gored.

Debt burdens on marginal borrowers are reduced and employment increased today at a cost to the taxpayer that is spread out over years in the future. All in order to prevent a precipitous decline in output today that would have even greater ramifications for years to come. This is Macro 101. We can debate the details – size, anticipated effects, etc. – but certainly you grasp the concepts, yes?

I certainly do grasp the concepts, but I think in your pragmastism you’ve lost something. We’ve been doing exactly this now every year since at least 1983 with only two exceptions. At some point the thought process must come full circle to we are now dependent on that stimulation to keep some semblance of normal in the system. In other words no facade of demand could possible satisfy the title wave of supply that we have created in all facets of our society, without constant stimulation. At a certain point you pass the fulcrum where borrowing makes any sense, and someone finally asks, “how much are these assets really worth anyway?”

So the question always comes back to your ageless wisdom, “it all comes back to who’s ox is being gored.” In this case the solid majority of Americans who didn’t go off the deep end of debt are being punished to subsidize the greed and profligacy of a minority of business and people. Now I could understand the argument about stimulus or debt creation if in the long term it really fixed the problem, but we keep going around and around with these credit inflation cycles and never fix the problem.

I don’t even have children but assuming we can re-flate the economy temporarily what are we doing to another generation to feel less pain now? Just because the two generations before me kicked the can down to me, does that in any way justify me doing it to someone else? That’s some kind of pragmatism.

As far as intrinsic value. Its a concept like anything else. You’ll notice I don’t use it, but did use historic value, because to me the current value of any object is a function of observing its price historically weighed against the current inputs of supply and demand (effective.) In computer science my valuation model is called a finite state machine. Its a simple machine who’s next state or in this case price is determined by the current state and the series of inputs. If you believe in the intrinsic value of something and nobody else does, then how does it have intrinsic value? This is especially true in housing, where at most the intrinsic value of a unit is equal to some future discounted cash flow multiplier of its highest economic use. It stands to reason then that you must also have an intrinsic value for that multiplier, otherwise the value of the asset wouldn’t be intrinsic as the multiplier changed. All I’m trying to illustrate is that we come up with models to value things, but ultimately its only true value is what someone else will give us for it, that we need.