Geithner stressed that soon after the crisis, the US will need to get spending under control. But for now he is willing to live with massive budget deficits to spur economic activity.
"That is very important to do, because the American people and investors (around the world) need to understand that we will have the will and the commitment as a country to go back to ... living within our means,"
"To get to that point we have to get a recovery in place."
What he really means
First of all the timeframe that Geithner is talking about is important to the discussion because the government expansion that in underway is open-ended – with most of the TARP money and bailout money expected to be spent over a five year period which can be extended indefinitly. This massive government spending will continue throughout Geithners term in office and the next administration will have to do the spending cuts.
The good news is that government officials are starting to give up and let the free market take over as they should have from the beginning. Geithner is right about the government monetary policy being the primary cause of the recession, but he failed to mention the specifics.
Like how the congressional Finance and Banking Committee (Chaired by Christopher Dodd and Barney Frank) created the housing bubble by supporting their social agenda to create housing welfare by giving Freddie Mac and Fannie Mae government support which allowed them to become monopolistic entities that are now ‘too big to fail’.
Geithner also didn’t mention that the Federal Reserve is the primary cause of the credit expansion that drove the last decade of overspending by holding interest rates under market rates for many years to avoid the overspending of the previous administration - as Senator Ron Paul has been warning us about for many years.
I think the real audience that Geithner is speaking to is the rest of the world so that foreign nations continue buying T-Bonds and the current administration avoids the looming dollar crisis. This is just like I wrote about last week, when Obama was addressing the world more than the public.
Facing the Recession
The bottom of the recession will be when the government gives up and lets the free market do what it needs to do and this comment from Geithner is the first sign that they are headed in that direction.
As I wrote before, eventually the nation will have to face the recession and the sooner the government starts facing the recession the better.
Luckily Geithner can say things like, “we will have the will and the commitment as a country to go back to ... living within our means” because he is not an elected official and no elected official wants to tell the public that the good times are over and the jobs are gone.