Politicized Lending

The central bank is increasingly having to make politically sensitive choices. For example, it is weighing whether loans to people who buy speedboats and snowmobiles are as worthy of help as those to people who buy cars. And it is being besieged by arguments from R.V. manufacturers and strip-mall developers that they play a crucial role in the economy and also deserve help.

Many of the decisions could have political repercussions. On Feb. 9, President Obama traveled to Elkhart, Ind., a Republican stronghold that Democrats hope to convert to their column. Elkhart is also home to much of the R.V. industry, which has been battered by the recession.

The President gave a speech to the R.V. industry in February. What do you think happened in March?  Read the whole thing if you have any doubts.

Everyone says they want the Fed out of the lending business but power corrupts.  I worry about the long-term impact of politicized lending much more than about inflation.


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