Posted on 11/27/2008 6:48:26 PM PST by 2ndDivisionVet
Barack Obama and George W. Bush seem to have come away from their study of the Great Depression with similar conclusions:
To wit: After the Crash of 1929, the Federal Reserve did not move fast enough to save the banks and inject cash into the economy. Second, the New Deal, far from being wastrel deficit spending, was not bold enough. So it was that America wallowed in depression for a decade until the unbridled spending and mammoth deficits of World War II pulled us out.
Bush and Obama seem determined not to make the same mistake.
We are all Keynesians now.
Thus, we have the $700 billion Bush bank bailout, the $700 billion "stimulus package" Obama wants by inauguration to "jolt this economy back into shape" and the $800 billion fund Hank Paulson created to get consumers borrowing and buying again.
These come on top of Bush $455 billion deficit, the $29 billion bailout of Bear Stearns, the $105 billion in pork to grease the $700 billion bailout, the $100 billion to $200 billion to keep Fannie and Freddie afloat, the $140-billion-and-counting for AIG, the $25 billion for the greening of GM, Ford and Chrysler, the $25 billion more to save the Big Three and the $20 billion for CitiGroup.
Now much of this overlaps, and some will be retrieved. But we are still staring at a deficit that could approach $2 trillion.
How would this stack up historically?
A deficit of $1.4 trillion would be 10 percent of gross domestic product, dwarfing the postwar record 6 percent run by Ronald Reagan in the Jimmy Carter recession.
Bewailing the "Reagan deficits" has been a staple of Democratic oratory. This will stop. But the politics of this is not the point, the policy is.
Consider what we are about to do. Bush in 2008 spent 21 percent of GDP. States, counties and cities spent another 12 percent. Thus, one third of GDP is spent by government at all levels. Obama and Co. propose to raise that by another 10 percent of GDP. We may soon be north of 40 percent of gross domestic product controlled and spent by government.
That is Eurosocialism.
And where, exactly, are we going to get the money?
Americans save nothing. We spend more than we earn. Thus the levels of consumer debt, credit card debt, auto debt and mortgage debt. U.S. foreign-exchange reserves amount to a piddling $73 billion.
The only nation with the kind of cash on hand we need now -- if we don't print the money and invite another gigantic bubble -- is China, with its $2 trillion in foreign-exchange reserves.
Will Beijing lend back the dollars it has piled up by selling to us?
China certainly has an incentive to keep Americans spending. For our purchases of Chinese-made goods have often been responsible for 100 percent of China's growth. China does not want to kill the American goose that lays those golden eggs -- until the goose can't lay any more eggs. Then they won't need the goose.
But should China decide to lend us the money, what will Beijing demand in interest rates and assurances that we will not default. After all, the U.S. debt is 70 percent of GDP, our savings rate is near zero, and our merchandise trade deficit is still running at 5 percent to 6 percent of GDP.
Unlike the 1950s, we are today dependent on foreigners for two-thirds of our oil and for much of our manufactured goods -- toys, TVs, radios, cameras, cars, shoes, clothes, bikes, motorcycles -- and for the $700 billion to $800 billion we borrow each year to pay for these imports.
With U.S. homeowners, consumers, companies and banks now going bust, why must the nation borrow trillions more to bail them out? So we can maintain our status and standard of living as the last superpower.
Bush and Obama are competing to shovel out trillions of dollars, so we can return to the good times of yesterday.
But wasn't yesterday the root cause of today? Didn't saving nothing and spending more than we earn, purchasing what we cannot afford in cars, consumer goods and houses, buying far more from abroad than we sell abroad -- didn't that cause this crisis and crash?
A family man in America's condition, awash in debt, spending more than he makes, would cut back consumption, find a second job and get out of debt. Or declare bankruptcy, accept the shame and humiliation, change his wastrel ways and start anew.
Is it different for a nation?
Yet we seem to believe we can borrow and spend our way out of a swamp of unpayable debt into which borrowing and spending have plunged us.
We are headed either for default on our debts and bankruptcy as a nation, or something less honorable: a quiet cheapening of the debts we have incurred by inflating and destroying the dollar, robbing our creditors of what we owe them and robbing our own people of the value of what they have earned. And so it has come to this.
What would the Founding Fathers think of us now?
But the head honcho is GOP, and the head honcho gets the most blame.
This is the largest robbery in the history of man-kind.
All these party frauds from both sides look pretty bad right about now.
That's why we wrote in Paul for President this time around. We knew he wouldn't win, but we sure sleep better knowing were wise to all these political frauds.
Everyone should watch the video you provided here.
Yes, we are a nation of debt and spenders with no savings. The day of reckoning is coming. In the meantime, I am going out on Black Friday and charge Christmas!
He may be right, but he’s still a nazi sympathizer.
Peter Schiff, Ron Paul's financial adviser.
I'd vote for Buchanan and Peter Schiff before any of these inept bozos from either party.
they don’t want to because we have a govt policy that encourages their laziness. Why work when your unemployment benefits get extended? Why bother saving when govt helps you get a loan?
As many right-on thing as Schiff constantly advocates for; the skeptic in me feels the need to point out that someone who is perpetually pessimistic will eventually - by the laws of probability - be proven right.
RE :Schiff was Ron Paul’s economic adviser.
I found that out too late. I was turned off when Paul said we could just abandon Iraq , but he looks brillant otherwise,he looks like a genius, the R party is looking like an aimless losers.
It’s easy to be against Obama. But what if you want to believe in R leader Bush GWB, because you want the best for country, and you used to have a party you were proud of 1993-1996, and you painfully year after year watch them go the wrong way. And you know that they will lose big time because they deserve it? And your fellow remaining conservatives blame the media (which is liberal and one sided this election, but partially because it goes after smelled blood like GWB) and you remember a party you were proud of, but you know a failure to realize mistakes will bring further doom? That is where we are. 1993 looks like a wonderful dream. Dick Armey where are you!
I’m no big fan of Pat Buchanan, but he’s right this time. There just seem to be no good choices.
He’s talking about on average. For the first time in history I believe Americans on average spent more than they took in.
The congress really doesn't understand this, but know that they need to keep the cash turning to keep their place in the power and cash steam that lets them live in style and retire with incomes several dozen times the net worth amount they entered congress with.
The fed doesn't want anyone beyond their circle to know how it all works.. it just keeps them in the power circles and secure for life. Proof? Name one in the last half century+++ that has seen jail or left bankrupt?
Treasury folks know who prints the money and knows the details of how the cash actually gets to the Fed. Again, name one Treasury wheel or underling who has seen jail or left in embarrassment in the last 50++ years.
I was that way about Paul at first too. Then I actually started researching monetary policy and the banking system and realized he knew what he was talking about.
"We may soon be north of 40 percent of gross domestic product controlled and spent by government. That is Eurosocialism. "
I would be afraid too if I were agreeing with Pat.
But you likely aren’t agreeing with him, you are just agreeing on a couple of specific facts in this whole debacle. Undoubtedly, you don’t agree that the solution to all this is to stop trading with foreign countries and build a giant wall around the U.S. to protect union jobs in the upper midwest. And you probably don’t think that we should have put our hands over our eyes and watched WWII happen without us simply because Hitler ‘really wasn’t that bad’ and the real cause of WWII was Churchill trying to protect Poland and France.
Getting into bed with Buchanan on anything is a suicide pact. It’s a short plank and everybody else has to walk it with him when he makes his next wackjob claim - and the GOP will always get tarred with the same brush.
Under Bush, we witnessed the biggest expansion of government in American history.
You can spin it any way you want but the bottom line is this will make the electorate more beholding to the traitors in Washington.
Why don't these idiots take the 73 billion and turn it over to every working US citizen and tell them to pay off their debts then return what is left over.
Many Freepers have consistently belittled Pat, I have always had a soft spot for the man and yeah when he is right he is dead right. As the constant realist, I believe we are headed for a monumental change and none of us will like it. As to guarantees to our Chinese friends, how about the passing on of our secret technology, you know, the ‘no way, never happen’ kind.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.
