But it will only work if we export a lot of jobs. :)
Posted on 11/20/2007 11:28:46 AM PST by fweingart
In March 1929, the Harding-Coolidge era came to an end. The eight years had witnessed the greatest peacetime prosperity of any nation in history: America in the Roaring Twenties. Early that March, Calvin Coolidge handed the presidency over to Herbert Hoover, who had just pulled off a third straight Republican landslide.
"I do not choose to run," said Coolidge, who could easily have won a second full term. Silent Cal went home. Hoover, whom he privately derided as "Wonder Boy," presided over the Crash of '29 and the first three years of the Great Depression.
History holds Harding, Coolidge and Hoover responsible for the Depression, with Treasury Secretary Andrew Mellon, and Reed Smoot and Willis Hawley of Smoot-Hawley fame, as accessories. As Voltaire observed, history is a pack of lies agreed upon.
Two men debunked the myth that the low-tax, high-tariff policy of the 1920s brought on the Depression. The more famous is Milton Friedman, who proved to the satisfaction of a Nobel Prize committee that the Depression was a monetary phenomenon. The Fed had opened the sluices, and the money had swamped the stock market.
When Wall Street crashed, there came a run on the banks by men who had bought on margin, a depositors' stampede, a bank collapse, a wipeout of uninsured savings and the loss of a third of the money supply, lifeblood of the economy. The Fed never gave the nation the needed transfusions. Hoover and FDR, misdiagnosing the crisis, raised taxes and wrote up new regulations, which was like putting a body cast on a patient in shock from the loss of a third of his blood
The Smoot-Hawley myth, repeated by John McCain in the Detroit debate, was demolished by Alfred Eckes of Ohio University, Reagan's man at the FTC and America's foremost authority on the history of trade and tariffs, in his 1995 "Opening America's Markets."
The point of this brief history: The recent hand-off from Alan Greenspan, the maestro of the Global Economy, to Fed Chairman Ben Bernanke may turn out to have been a lateral far behind the line of scrimmage, leaving Bernanke holding the bag for a recession for which he is no more responsible than was the hapless Hoover.
Last week, the stock market saw 4 percent of its value wiped out. Oil reached nearly $100 a barrel. The dollar fell to record lows against the Canadian dollar and the euro. The price of gold was $850 an ounce, signaling inflation and a worldwide lack of confidence in the Fed's ability or determination to defend the world's reserve currency.
The Chinese, with $1.4 trillion in reserves, perhaps 80 percent in dollar assets, indicated they may dump dollars and move into euros. Merrill-Lynch took an $8 billion hit. Citibank is signaling massive losses from its subprime mortgage debt. General Motors reported an operating loss of $1.6 billion for the quarter and a whopping $39 billion charge that is among the biggest profit hits ever reported
Where does this leave Bernanke? On the horns of a dilemma.
Exposure of all that subprime debt going rotten on the books of our biggest banks, the staggering losses being reported, the inability of homeowners to refinance or borrow any further against their equity, the credit crunch -- all argue for an easy money policy to get capital back into the economic bloodstream.
Thus the Fed has cut interest rates from 5.25 percent to 4.5 percent, thus the howls for deeper cuts, thus the market anticipation of another cut, though the Fed has said no more.
But the Fed is responsible not only for the national economy. It is responsible for defending the dollar, which represents the real savings and wealth of the nation. And that dollar has lost more value in seven years than in any similar period in modern history. A euro, worth 83 cents the year Bush was elected, has risen in value to $1.47.
As the dollar sinks, exporters may cheer rising sales, but at home we will soon find that the prices of all those imported goods from Europe and Asia down at the mall are starting to rise. U.S. soldiers, diplomats, tourists and businessmen overseas are already feeling the pain of a falling dollar.
If a recession is generally a sign the Fed should loosen up, a run on the dollar is a sign the Fed should tighten by raising interest rates to make dollars and dollar-denominated assets more attractive.
But the Fed's raising of interest rates would push up the rates on mortgages, credit cards and auto loans, and push millions of marginal folks into bankruptcy and the country into recession, a disaster for the Republicans.
But, given their free-trade fanaticism and free-spending ways, that fate would not be undeserved. Say a prayer for Ben Bernanke. He may have to eat the football that scrambling quarterback Greenspan tossed to him far behind the line of scrimmage.
No, ! I would argue the costs of fuel have been always passed on to the consumer!
$1.48; we’re in serious doo doo if it plunges through the $1.50 psychological resistance point.
That could produce panic offing by major banks world wide and dumping by S. Korea, (who’s been quietly selling into this mess), China, (who will deny it) and the Saudi’s,(who’ll deny it) and who are probably doing it already through some surreptitious means we can’t see.
The government didn’t close the banks per se, the banks were doing a fine job of that on their own, for several years. What Roosevelt did was close all the (few) remaining banks, calling it a “bank holiday”.
Are you in Alaska?
The prolonging of the depression was exacerbated by the bone-headed socialism of FDR. With proper market savvy, instead of paying attention to the abysmal failure that was the USSR, Roosevelt drug us much deeper.
One day he will be right -- just not regarding history. And every doom & gloom kook will say "I told you so!". And then afterward, after the mess has been repaired (unfortunately after much too much populist intervention and fumbling before finding the market-based solution) we will have to still wait out another 20+ years of them claiming that we're going to be in the throws of doom again. With a doomer, the sucess rate can be minisule and yet one still be celebrated by fellow doomers for keeping up the good fight against the long odds...it's a sickness with them.
With our population diluted by the scum that crawled in south of our border coupled with the almost complete drain of our manufacturing base, I would say we're in deep clinton.
I think this is a misread of Friedman.
The problem with the FED has been akin to “pushing on a string”; easing interest rates tends to create speculation in the markets, one cannot prevent money lent from ending up in the stock market, that’s what Friedman was talking about.
If you look at the charts, after the crash the government was actually pretty good about easing rates but it didn’t help.
You’re a poorly informed buffoon.
Buchanan has been more accurate in his prognostications about the decline and fall off of this culture, this nation and it’s in-bred, poorly performing leadership over the past 20 years than anyone else. He is, in my opinion, the only true conservative left standing. The rest are mere shells, pandering to the polls in an endless self-serving scheme of self-aggrandisement and hopeless over-reaching. While obviously ignorant of history, the one positive thing that can be said of Bush is that at least he is true to himself and has the courage to take a firm stand for his convicitons, ill informed and poorly advised though he may be.
No he doesn't.
Pelosi, Reid, Frank, Lautenberg, Schumer and the Clintons....hate America.
Pat is just pointing out how he feels the Fed policies are not good for America.
The politicians have won if their goal was to ruin our nation.
It's hard to believe that someone would ridicule everything about the man such as you just did.
There was a time when many of us were ready to rally around this man. His outpouring of books and articles are mostly on the mark and those that deny that are deluding themselves.
I could go on w/ his buffoonery but really, life's too short.
Have you come to realize that too?
When I see eggs, for a basic example, go from 84 cents to $1.65 in less than a year I believe it's time to worry.
If President Bush and Vice-President Cheney had used their bully pulpits and railed against the ethanol farce chicken feed wouldn't be as expensive as it is today. Had they used those pulpits against those that would deny America it's own oil and pushed strongly for drilling in the freaking Pristine Arctic Wilderness as well as off the shores of Florida, where China is now drilling, we'd be in a position to tell the arabs to go make love to themselves.
IF they'd kicked OSHA and the DOE into the Potomac, we'd have new refineries instead of the miserable situation we find ourselves in today: we're actually importing REFINED crude, or gasoline, if you will.
Read it again. This time take notes.
The only thing that pat is correct about these days is his insisteance that there is a demographic problem and that we, a nation, are not sustaining our population with higher birth rates. But his ideas about how government should get involved are always off the mark. Pat’s a statist who disdains markets. He’s a central planning type who only pays liberty lip-service as long as it helps him make a point — then he drops it (embrace of liberty) like a bad habit. He’s the nanny-state extoller within a party that is supposed to champion for limited government. Defend him if you wish but he is like the anti-Reagan these days.
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