from Mark Thoma.

To me, some of the beliefs held by the other side are astoundingly unbelievable, but they would, of course, say the same thing about me.

He then links to a piece by the evil twin of Andy Harless.

With the recession going on, people are afraid to do anything risky with their assets, so they keep them deposited in banks, earning no interest. Banks can then invest these deposits in Treasury notes and credit the interest on those Treasury notes to their bottom line, thus improving their balance sheets. So the government pays to recapitalize banks while receiving nothing in return.

Now this bailout program is not without its risks. The biggest risk is that the economy will recover, which would be a disaster for the program.

I call it neutron-bomb monetary policy. The banks are still standing, while the people are getting killed. I don’t think that is the explicit intent of the Fed, but the structure of the organization makes it much more responsive to the thought process of bankers than to that of ordinary Americans. So, Progressives, how’s that central bank independence thing workin’ out for ya?