The Mother of all Bailouts?

Start with this post sent to me via the Populist America newsletter:
http://www.populistamerica.com/the_mother_of_all_bailouts

My response to the author can be found in the comments; I've reproduced it here. His questions are in bold, my responses are in normal font.
-----------------------------------------------------------------------------------

As mentioned above, if not having enough dollars is the problem, why not have the government give each person a million bucks? Would that fix everything?

No, because by simply increasing the number of dollars, you decrease the inherent value of each individual dollar. The dollar is not wealth, it is a tool for moving wealth. *Work* creates new wealth.

If increasing spending fixes an economy, how about if we all stand in a long line, and everyone hand $20 to the person next to them? How about $1,000? Would that fix everything? (Or, if gifts aren’t good enough, everyone could buy his neighbor’s shoes for $1,000. Wouldn’t all that “spending” save the day?)

This is a misleading question. The economy *is* spending, by definition; but more importantly, it is spending on new effort that creates. By simply trading money for no work, we gain nothing – again, the dollar is a tool for trading, not wealth itself. If we all give each other $20, we waste everyone’s time. If we all make *new* shoes, and *then* pass around $20 in exchange for them, we have an economy.

If it helps the economy to redistribute wealth, how about if the government takes away all existing wealth and divides it up equally, 300,000,000 ways? Would that fix everything?

Also a misleading question. Redistributing wealth is not inherently beneficial to a society, especially when that redistribution is not in line with individual effort. However, reducing the overall income gap *is* beneficial to society. The more top-heavy a society gets, with the upper-upper class holding more and more of the money, the more unstable it gets.

A healthy middle class is a healthy and stable nation, a large economy, and an improved quality of life for the nation as a whole. A weak or non-existent middle class results in a smaller economy, a lowered quality of life for the nation as a whole, and subsequently results in an unstable nation.

Effectively, what it comes down to is this: Money in circulation for trade of goods and services is a stabilizing force for society. Money held out of circulation is a destabilizing force, as is is not doing any work other than to foment jealousy.

If the problem is lack of jobs, how about if the government gives a job to anyone who wants one, paying them $50 an hour to carry empty boxes around in circles? Would that fix everything?

Again, this is misleading; suggesting that the only solutions being put forward are communist. Money is not wealth. If we want to pay people to do work, there is lots of *actual* work that needs to be done. There is no reason to start paying for box-carrying when we have infrastructure, medicine, farming, research, etc that needs doing.

If a lack of credit is the problem, how about if the government gives everyone a new, federal credit card with a $1,000,000 line of credit? Would that fix everything?

No. We have too much debt in general; and we’re going to have a rough time over the next few months as we reduce the debt in circulation to come closer to a safe ratio to the actual money in existence. I’m not much of a fan of 1:11 lending; 1:33 lending was insane, and we’re paying the price for it.

If “corporate greed” is the problem, how about if government outlaws making profits, forcing companies to sell things at prices that would just make them break even? Would that fix everything?

This is a specious argument; there is a vast gap between “lax regulation” and “outlaw all business”. Smart regulation is a necessary part of any market; or do you think that monopoly laws should be eliminated? What about workplace safety regulations? Food quality control?