We've seen behind the curtain, as the Fed waved its magic liquidity wand over Wall Street. Now it's time to enlist this tool in the service of the people.
The Fed's invisible hand first really became visible with the bailout of AIG. House Speaker Nancy Pelosi said in June 2009:
"Many of us were, shall we say, if not surprised, taken aback when the Fed had $80 billion to invest -- to put into AIG just out of the blue. All of a sudden we wake up one morning and AIG has received $80 billion from the Fed. . . . So of course we're saying, Where's this money come from? "Oh, we have it. And not only that, we have more.'"
How much more -- $800 billion? $8 trillion?
The stage magician smiles coyly and rolls up his sleeves to show that there is nothing in them. "Try $12.3 trillion," he says.
That was the figure recently revealed for the Fed's "emergency lending programs" to bail out the banks.
"$12.3 trillion of our taxpayer money!" shout the bemused spectators as pigeons emerge from the showman's gloved hands. "We could have used that money to build roads and bridges, pay down the state's debts, keep homeowners in their homes!"
"Not exactly tax money," says the magician with his mysterious Mona Lisa smile. "When did you have $12.3 trillion in tax money sitting idle?"