Posted on 04/02/2009 7:59:06 AM PDT by E. Pluribus Unum
Not long ago, it seemed that the economic possibilities in this country were endless. The unemployment rate was low, the official inflation numbers seemed to be in check, and the housing market was booming. Who would have thought -- other than some of those pessimistic Austrian economists -- that the United States really had what Peter Schiff has called a "phony economy"?
Today, as unemployment creeps toward double digits and economic growth is headed south, people clearly understand that the U.S. economy is in trouble and, naturally, they want to blame someone. Unfortunately, it seems that most people are taking the cue from the political classes and turning their anger on private enterprise. While we see protests outside various businesses, it is interesting -- and very telling -- to note that it was not until very recently that anyone was protesting in front of that Greek temple known as the headquarters of the Federal Reserve System, and they are still a precious few.
For that matter, there are no protests whenever President Barack Obama promises to spend the country back to prosperity via massive borrowing, all pushed along by the Fed's virtual printing press. It is as though people really believe that Obama can work magic and turn spin straw into gold, or at least paper worth even less than straw into gold.
However, there is no way that this can occur, and the very "stimulus" program and accompanying three-plus trillion dollar budget is the problem, not the "solution." It is time for some very hard truths to be told about this budget and the disastrous direction it is taking the people of this country. Far from leading this country back from the brink, this is an economic "plan" (if we can call it that) which, if implemented, will turn this once-proud country into a banana republic.
The first and most important, Americans are being told that they really don't have to work and they really don't have to produce anything. All that is needed, according to the president and his underlings, is for the U.S. Government to borrow a few trillion dollars with people spending it on consumption goods. Furthermore, most of the borrowed dollars will flow to China and other countries that export those consumer goods to the USA; American officials expect the Asians to dutifully stuff those dollars back into U.S. Government bonds, with the whole process repeating itself.
For all of the modern leftist talk of "sustainability," this is not sustainable. It is a Ponzi scheme that ends when Uncle Sucker runs out of buyers of its depreciating bonds.
Second, in the real world, one pays for imports through exports, and about the only thing this country is exporting is debt and green pieces of paper. In short, Americans are not earning their current standard of living, and the current house of cards is falling down.
Third, in the normal boom-and-bust cycle, the malinvested lines of production are liquidated or transferred to those areas supported by patterns of consumer choice. The recovery is led by those firms with strong balance sheets that were not part of the malinvestment parade.
I emphasize the word "normal." This is not a normal business cycle, not because it has failed to follow the proscribed patterns, but rather because of the government's response to the initial crisis, which occurred when the housing bubble popped. Not only has the government tried to prop up one failing firm after another, it has demonized those sectors that still are relatively healthy, the very economic sectors we will need to begin to rebuild the economy.
Take energy, for example. In normal times, we would want a healthy energy sector to help lead the recovery, but Obama, citing the "global warming" bogey, seems to be calling for the destruction of the coal and oil industries and to replace them with. . . corn-based ethanol and windmills. This is like trying to replace automobiles with the horse-and-buggy and claiming one is making an economic advancement.
Between the environmental and the other anti-business initiatives, the Obama administration is making it clear that it wants to force up business costs. Of course, doing such a thing at any time is going to drag down the economy, but to do it during a downturn only makes the recession more intense.
What this administration seems to believe is that on one side, it can decrease the production capacity of the U.S. economy, but on the other side, stimulate it by printing new money. Perhaps this seems like a sound economic plan to a politician, but to anyone with a whit of common sense, it is madness.
This administration is not presenting as much an economic recovery plan as it is creating a recipe for turning this country into a First-World Zimbabwe. There are historical examples, as Argentina comes to mind.
In the first half of the 20th Century, Argentina was one of the wealthiest countries in the world. However, after its political leadership followed a regime of price controls, protectionism, and outright inflation, its economy sank into a morass and the country has been trying to sort out the mess ever since.
People like Fed Chairman Ben Bernanke believe they are too intelligent and too clever to repeat the mistakes the Argentine leadership made. However, if history is any guide, the joke is on Bernanke, as well as the Americans who have put their blind faith in Obama and the faux "magic" of the Federal Reserve.
Yah, we should listen to the Germans and the French - they also don’t believe Obama’s plan will work.
what we had was phoney mortgages sold bundled up and sold on the bond markets as A+ investments. What the banks were doing, under FORCE by the DEMOCRAT initiative called "Community reinvestment" and enforced by ACORN, was giving loans out to people who couldn't afford them.
What we had at that point was a broke banking system. All that needed to be done at that point was allow those that took out this excessive debt, default, let those banks claiom bankrupcy, and allow the market to correct itself. Then all would be well.
Instead what we have is government destroying the entire economy, increasing spending and debt in a time where the opposite needed to be done, with stimulus towards private sector business growth to replace the jobs lost in the failed secor of the economy.
They should know, it isnt working for them.
As long as those who are actually to blame have the national media working on their behalf...
It’s a recession when your neighbor loses his job
It’s a depression when you lose yours
And a recovery when Obama loses his
It’s buckwheats for the economy folks...it’s buckwheats.
Woman tells husband I got the shoes at 50% off and the dress was 50% off so you see I saved 100% and it didn’t cost me anything I put them on the cred card = obama logic
in the real world, one pays for imports through exports
That part just isn't true. You pay for imports with profits; those profits can just as easily come from the domestic economy as from foreign trade. Now, it's true that, under Obama's plan, we may not be able to afford many imports -- but we won't be able to afford much of anything, period.
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