In a recent article in The Sovereign Society’s Offshore Letter, guest writer Chuck Dolce equated the practices of the Federal Reserve, our central bank, to those of The Godfather, Vito Corleone, whom he quoted, “Give this job to Clemenza. I want reliable people, people who aren't going to be carried away. I mean, we're not murderers, in spite of what this undertaker thinks...” - Vito Corleone. It is Dolce’s contention that our banking system operated much like Mafia loan-sharking.

The Mafia, Dolce says, were pursued and prosecuted by the US Government because of their extremely aggressive business model. The mobsters would expose you to often lascivious desires, then loan you money to pay for those, but expected you to pay it back in a timely manner or suffer the consequences. This is the same business model used by The Fed. The difference is that instead of some arm-twister calling on non-paying miscreants, the entire US economy tanked when the loans couldn’t be repaid.

Times were good and the Fed offered us money to buy things we really couldn’t afford, like bigger homes than we needed, expensive luxury SUVs, time-shares, condos, second homes, vacations, cruises, ad infinitum. Bankcard companies raised credit limits to new heights and cardholders went deeper into hock. Most of the borrowers got in way over their head and then the unthinkable happened, nobody could pay it back and the economy tanked.

The British press recently announced that their economic downturn had bottomed out and was starting back up. They said unemployment will continue to rise a bit before it too turns upwards. Employment always lags behind the rising economic changes. What did the Brits do differently than our “inside-the-beltway” clowns? They threw less money at the problem. They didn’t bail out AIG and a bunch of banks. There was no “cash for clunkers” in which taxpayer dollars was used to reward our fellow taxpayers for trading their gas-guzzling SUVs. The problem with that program is that the taxpayer dollars spent is three times that of the fuel cost savings experienced by the higher mileage vehicles that replaced those SUVs. What was the purpose of that program again? Oh, to stimulate the economic turnaround of General Motors and Chrysler . . . Ford took no bailout cash and is already turned around.

The answer inside the Beltway is to throw even more money at the problem in order to solve it, but excessive, deficit spending is what caused the problem in the first place. It that the correct way to fix it? I think not.