It’s abundantly clear now that too much borrowing and spending in recent years is at the core of the current economic crisis. But what perplexes Bill Bonner is that government policy still assumes that more of the same is the only way to get us out of this mess. And Wall Street is only too happy to go along with it…

More from The Daily Reckoning:

The U.S. government borrows money from taxpayers… gives it to Wall Street so they can lend it back to the taxpayers at a profit. Wall Street borrows ‘our money’ from the Fed at, say, 1%… then they lend it back to us at, say, 6% or 7%. That way, Wall Street makes money and we can still borrow what we need.

Nice system huh?

And take that Hank Paulson…please! Now, there’s a big city guy we admire. He made a fortune running Goldman, right up until he was tapped to run the U.S. Treasury. He knows all about those CDOs, SIVs, MBDs, - heck, he probably knows every letter in the entire alphabet. And he’s used them too - putting together those fancy sub-prime investments and such.

Well, that’s why he was the perfect guy to be the honcho at the Treasury Department. He knows all about that toxic investments that are causing so much trouble - after all, his firm created them.

Of course, if you ask him, he’ll deny it. He’ll say it was just some rogue investment engineers down in the basement who did all the bad stuff. He was attending important meetings and saving nature; how was he supposed to know what they were up to? Yes…he was the CEO. But c’mon…no chief exec can keep up with all that alphabet stuff, can they?

But that’s the kind of guy you want running the economy, right? Keeps his eye on the big picture…not distracted by the details…

And then there’s his replacement, Tim Geithner. We know he’s the man for the job. Why? Because he’s got experience. He’s been on the case for years. As head of the Fed in New York, he was right there while all those investment scientists were conducting their experiments…he was practically right in the room - keeping a watchful eye open - when they ran those fancy linear regression models…mixed in some subprime mortgage debt…and then tossed in a whole ton of fizzy derivatives. Nobody really knew what happened next. The windows blew out and a cloud of smoke rose so high in the air you could see it from New Jersey. But heck, it wasn’t his fault the stuff blew up!

And since these guys know so much about how we got ourselves into this crisis, they are clearly the ones to help us get out… Makes sense, right?

Sure, they’re going to give money to their old friends back on Wall Street…and do everything in their power to prevent the cost of living from going down…

…and of course they’ll be encouraging people to borrow and spend… then people can spend more money they don’t have on more things they don’t need. And then they’ll be deeper in debt than ever before.

…But that must be just the way this money thing works. We shouldn’t be so thick about it…

Source: Welcome to the Recession…Already in Progress