Which is true even if you are the UAW. But the tricky part is that, if you are the UAW, the taxpayer foots the bill.

In the last 20 years, the U.A.W. has donated more than $25.4 million to federal candidates, 99 percent of it to Democrats, according to OpenSecrets.org, a site that tracks campaign contributions.

The union ranks No. 16 on the group’s list of top 100 political donors, known as “heavy hitters.”

Now, you have the government and the union running the companies. Good luck with that.

The Fed statement yesterday once again emphasized that inflation is now a policy goal, officially abandoning the Fed’s mission of price stability. Inflation is a tax that is “not seen,” as Bastiat would say. It is the burden that the bailouts of the lenders is putting on the rest of us, and will cripple the growth potential of the economy. The weasel words about longer term price stability are just that, in the longer term we are all dead. Bernanke wants negative real interest rates, to stimulate a return to bubble conditions, and with nominal rates near zero, the only way to achieve that goal is with high inflation. He is quite insane, in the Einsteinian sense.

Moreover, the Committee sees some risk that inflation could persist for a time below rates that best foster economic growth and price stability in the longer term.

The economy will not return to stable growth until the Keynesians are discredited. It seems that bankruptcy is the only way that will happen. Apparently the bond and foreign exchange markets are accepting this fact, and rates are rising while the dollar sinks.

Treasuries were sharply lower today and my TBTs started to look perky. All my other inflation trades are pretty sad, I must admit, so I’m hoping this is the start of a turn. So far, definitely not one of my better months.

We hear from the Fed tomorrow. The Treasury has announced a massive issuance schedule for new debt, funding the various plans and schemes, as well as just plain old deficit spending. So the question is, who is going to buy them? Will the Fed tell us that it is going to be stepping up to the window, freshly printed cash in hand? If so, then we might start to see some real concern about inflation. If not, then bond prices will continue under pressure and rates will rise. Really, I’m just waiting for a realization that there is no good outcome here. Either the Fed inflates, in which case rates go up, or it doesn’t, in which case rates go up anyway. In my opinion. Will the bond vigilantes finally reappear and face down Mr B.?

I also opened a modest short in the S&P at the close. Nothing specific, just feeling bearish. Probably gap up in the morning, of course.

The statement from the GM bondholders in respect of the company’s restructuring offer.

The current offer is neither reasonable nor adequate. Both the union and the bondholders hold unsecured claims against GM. However, the union’s VEBA would receive a 50 percent recovery in cash and a 39 percent stake in a new GM for its $20 billion in obligations; while bondholders, who own more than $27 billion in GM bonds and have the same legal rights as the unions, would only receive a mere 10 percent of the restructured company and essentially no cash.

Well, yes. Hello bondholders! What don’t you get about campaign contributions from a union? As you observe:

….amounts to using taxpayer money to show political favoritism of one creditor over another.

So what else is new? Nancy decides who gets the money. Pay if you want to play. Surely you don’t imagine legal rights matter to politicians?

CNBC reports:

An ideal interest rate to help the US economy to cope with the recession would be a negative 5 percent, the Financial Times reported on its Web site, quoting an internal Federal Reserve analysis…..

….As rates cannot be cut below zero, the Fed’s internal research suggests it should maintain unconventional policies that provide stimulus roughly equivalent to an interest rate of minus 5 percent, the Financial Times wrote.

Fed staff suggested the central bank may need to expand its asset purchases beyond the $1.1 trillion already pledged, the paper said.

Can’t they see that they’re destroying saving and investment? Talk about institutionalized idiocy. They all think alike, so no-one disagrees, but they’re all living in a fantasy world, where manipulating interest rates solves all problems. The whole basis of capitalism is that capital has value, that money has a time value, that one should be compensated for deferring gratification. These people have destroyed capitalism by providing what amounted to free money, eliminating the value of capital and forcing everyone to turn to speculation rather than investment. People’s retirement plans are ruined, not because they were given 401(k)s without education, but because there was no return from investment. The defined benefit plans are just as ruined as the 401(k)s, the professionals were able to do no better than the man in the street. The only people winning so far are the speculators, and that’s a tough game. Tell me about it.

By continuing the same policies, they’re now going to destroy the value of money, not just the value of capital. Arguably, testimony from Chairman Greenspan indicates that this has always been the plan, to pay out the Social Security Ponzi in worthless paper:

Rep. Maloni: My question was the statement by 2042, the entire system will be bankrupt. It will not be bankrupt, I agree the trust fund will be gone, but there will still be the money coming in from the payroll taxes — enough to pay, by all accounts, three-quarters of the benefits. Is that true or not?

Chairman Greenspan: It’s true in dollar terms, but I suspect it may not be true in real terms. And the reason I’m saying that: if we cannot get full funding and the savings required to build up the capital stock in time for 2042’s production of goods and services, yes, the individuals may have the cash, but the cash will not buy as much as they think it would be. The real problem has got to be real resources, and this issue of whether or not the OASI goes bankrupt or not bankrupt is an interesting legal and political question, but it really doesn’t get at the economics of the retirement of individuals, the 30 million additional individuals.