Open Letter to the Federal Reserve

My twin brother Terry published a “tongue in cheek” economic blog called the Right Wing Wacko Newsletter from 2001 through 2007. Then he got distracted by other things. However, today he provides us with his thoughts about the present economic mind-set of our leaders in Washington, DC.

Terry Wilken

Dear Mr. Bernanke,

I understand based on your announcement at the conclusion of the FOMC meeting two weeks ago that the Federal Reserve is interested in purchasing additional assets. Good idea. I know that this is a new innovation of the Fed under your leadership. It sure has worked out well so far for our country, and I am willing to do my part.

The times are dire, and as loyal Americans we should all do what we can to contribute to the recovery. The Fed has the ability, unique in all the world, to create unlimited amounts of money out of thin air, with absolutely no adverse consequences. I certainly support your continuing to do this, and at an ever-increasing pace, as now seems inevitable.

I am a faithful citizen who believes that any well-intentioned American should be able to collaborate with our beloved central bank in the economic recovery. It just doesn’t seem fair that the opportunity for civic service should be limited to banks and poorly managed insurance companies. Yes, I know those banks feel a special sense of responsibility because they are your shareholders, but let’s look past that and open it up into a real grassroots program of sea-to-shining-sea stimulus, with just plain folks from Delaware to Alaska supporting their country by offering select assets for sale to the Fed, as nobly and generously as any fat cat!

In the spirit of patriotism, then, I present this proposal:

By this letter, I offer to sell to the Federal Reserve my home in Southwest Oklahoma City. It is a mid-century modern of just over 2,500 square feet, with 3 bedrooms, 2-1/2 baths and a beautifully maintained yard on just under one forested Hill Country acre. You wouldn’t want to live here, but it’s an okay house for dumb hicks who live in flyover country. The sale price will be $298 million. Terms will be cash but, in order to save wear and tear on the printing presses that will be so heavily used in the coming months, I will not expect currency, but instead will cheerfully accept your wire transfer.

The closing date will be October 7th, which will leave exactly one month for the benefits to the national economy to take hold before the November elections. If you want to close sooner, then I can have some buddies of mine bring a pickup truck over after work tonight and move my family’s stuff out. We have like a 120,000-to-1 pickup truck-to-limo ratio here in the OKIE State; kind of the inverse of what you are accustomed to. But I digress.

This deal I am giving you will be of tremendous benefit to the economy, as the proceeds of the sale will be deployed to fund no fewer than six Stimulus Operations, any one of which is almost certain to be more effective that the things that have been tried so far. Check it out:

Stimulus Operation #1: $200,000 to retire the existing mortgage loan, freeing up funds that can then be loaned to other borrowers who will in turn contribute to the much-needed reflation of home prices. I say we cannot move quickly enough to bring back the 125% loan-to-value loans, the 50-year loans, the 1.5% Double-Reverse Super-Duper-ARMs, and the 300 credit score qualification standard.

Stimulus Operation #2: $45 million to pay the capital gains taxes (before the 15% rate becomes as obsolete as the Constitution). The importance of this Stimulus Operation should be self evident, but, to avoid any misunderstanding, let me remind you that the government can deploy these resources more effectively than any private person, as the President reminded us just two weeks ago.

Stimulus Operation #3: $400,000 to purchase a replacement home. I am thinking of getting one of those nice, new condos that were built just before the crash and are still standing empty. You know what I am talking about, what with so much of this sort of thing on your balance sheet, along with some vacant shopping centers and a couple hundred billion dollars in unmarketable securities.

Stimulus Operation #4: $1.4 million in wanton consumption. This will help bring back the retail sector and will also prop up employment in luxury goods. After all, if we are going to keep the luxury goods sector strong, then somebody needs to be out there buying, besides the small number of financial players and political cronies who gobbled up all of the last round of stimulus money. Although it will be inconvenient, I promise to spend this money within seven to ten days in order to expedite the recovery effect.

Stimulus Operation #5 (or as I like to say, V): $50 million to buy a Gulfstream V, or maybe a Global Express if I can find a nice used one within my budget. I don’t want to go overboard here, but supporting the general aviation sector is as good a way as any to contribute to the recovery.

Stimulus Operation #6: $200 million to be placed in a portfolio of investments carefully targeted to bring about the continued employment of hard-working people so that they can pay a bunch of taxes that we are pretty sure will be going up next year (although the end of September is much too soon for any reasonable person to expect a clear indication of tax rates that will be effective way out in the future, more than three months from now). What? You’re skeptical about the portfolio? Well, yes, I know that capitalism is a thoroughly discredited idea, but it is no dumber than National Health Care! And, like the Congress, I am willing to try any dumb idea if there is even a remote chance that it might benefit our beloved country!

(Now that I think about it, and in the interest of full disclosure, I’d better point out that some of that that $200 million might end up in short positions. Not that I’m pessimistic or anything, but I’d hate to think of the consequences of committing fraud against the Fed. Just look at the way you guys went after … well, I can’t think of any examples, but I am sure there are some.)

Now if you’ve been following the math, then you probably noticed that a million dollars are unaccounted for. Let’s just call it “contingency,” and keep in mind that it is available to reimburse any miscellaneous expenses that were necessarily incurred by your people in the process of reviewing and approving this proposal. Or maybe we could use it to buy breakfast for one or two of those early morning meetings of the President’s Working Group on Capital Markets. Whatever you decide, we’ll keep it on the DL. (Or, as young hipsters at the Fed say, DS, for “deep storage.”)

Well there you have it. Yes, it will be a sacrifice for my family to move out of our house and downsize to a distressed condo, but we all must do our part to support the economy.

I know there is some danger that this deal, being several orders of magnitude smaller than the ones you normally consider, might at first glance seem unworthy of your review. I get that. But please keep in mind just two things. First, I’m not greedy. In your world, they say “Greed is good,” but think about it, how many yachts can you water ski behind? (I think I heard that in a movie.) Sorry, but where my country’s welfare is concerned, I am just not comfortable asking for the kind of money that the big boys are pulling down in these stimulus scams. Second, let me stress that, of all the stimulus deals you have funded and will continue to fund, my proposal truly is the best value proposition. After all, you are getting something of value instead of absolutely nothing.

I know that you must be very busy, but please have one of your people get back to me with your acceptance of this offer within the next two days. Otherwise I may have to take this opportunity to the Treasury or the Exchange Stabilization Fund—or maybe Goldman Sachs. You’ll probably end up funding the deal anyway, but you’ll pay a lot more, cuz you know how big their cut is.

Patriotically yours,

Terry Wilken
Oklahoma City, Oklahoma

You can read more of Terry’s writings at the Right Wing Wacko Newsletter archive.