Austrian Rantings and Raves

by Llewellyn H. Rockwell, Jr.
Posted on 2/9/2009 12:00:00 AM
mises.org


President Obama is under the impression that history owes him $1 trillion right now to spend on whatever he wants. His language is strident and full of irritation that anyone would question his right to live out his personal dream of being Franklin Roosevelt to George Bush's Hoover. This, he says, is what the election was all about.(It does not matter what you do to the supply side of the equation. Demand is in a deflationary spiral. Infrastructure spending does give more bang for the buck than a tax rebate , but debt deflation is the only way to get out of a debt crisis.The FDR analogy is hyperbole, but insofar as the juxtaposition of the two leaders suggest a change in national priorities the point is made. - AM)

The arrogance reminds me of George Bush after 9-11, who similarly believed that history owed him a gargantuan war in the tradition of FDR. And look how that arrogance led to disgrace and loss, as he unwittingly presided over the destruction of American prosperity while searching for bugbears abroad. (The arrogance of Obama has led to a stimulus plan that balances tax cuts with spending proportional to the parties' representation in the Senate! I find this comparison to be disgraceful. Simply put Bush destroyed lives, Obama actions, even if they prove to be misguided, are not comparable. I would say however that there is a comparison insofar as agenda items of the left can be pushed through under the auspicious of this national emergency similar to how the Bushies saw 9-11 as a good excuse to invade Iraq and get them democracy dominoes a fallin.'- AM)

It just goes to show you that the presidency is something like a drug. It makes people lose all connection to reality. Part of the reality that Obama needs to recognize is that the New Deal was a calamity far worse than the initial market downturn that began it. He needs to stop basing his policies on dumbed-down civics texts versions of events and consider the economic logic. (This is just plain stupid. The only reason that we don't look out the window today and see scenes that are exactly like the Great Depression is due to the raft of social programs that were created due to the Great Depression. If unemployment were correctly tabulated we would now be at 17-18%, global trade is crashing, business activity is freezing ... but we now have a safety net that exists even if it is under considerable stress - I am in full support of spending to support the states' in this regard.- AM)

With his rhetoric and policies, he has decided to demonize private enterprise, just as FDR did, as a way to present government as the great savior. Now, think about this. If there is a way out of the recession, it will have to be provided by private enterprise. It will come by new businesses, business expansions, entrepreneurship, new technology, and this will be the source of lasting jobs and prosperity. (Agreed, the entrepreneurial spirit will raise us from this morass. Success not because of government but oblivious to government. Government can only provide the temporary buffer to withstand the crippling blow of capitalism's excesses. - AM)

You cannot make a country rich by looting taxpayers and paying people to pound nails into siding at public schools! These activities amount to capital consumption. They are not sources of investment. You can say that they are stupid tasks or wonderful tasks, but it is not a matter of ideology as to whether such public projects will make us all wealthier. They will not. They drain the sources of wealth from society. They represent a cost, not a blessing. (They represent a way to initiate money velocity. If properly targeted they are effective, but they can't be the only solution. Holidays for certain regressive taxes -he most stimulative use of gov't dollars possible-, and free market valuations in the financial system are also needed.- AM)
That was also true of Bush's dumb stimulus program. He was only bailing out his friends at our expense. The effect was to give a little longer life to institutions that were failing anyway. It's pathetic that the Republicans ever went along with it. You will notice that the scheme didn't actually work.(Roger that.- AM)
Well, Obama is doing the same thing, though rewarding a different set of friends. This is not wealth production. This is wealth consumption. Do enough of this nonsense and you can destroy the livelihoods of an entire generation.(Too early for that accusation, although it is a softball one to make. The major concern that we should have if this author's premise is correct is whether or not the financial elites are Barry's 'friends'...- AM)

Americans are proud of their system of government, but consider what it has given us this time around. We had an outgoing president who thought it was his right to grab as much as he could while leaving. Now we have a new president who thinks that the election entitled him to grab as much as he can, right from the beginning. We get looted by the state coming and going. It all amounts to one massive war on prosperity and freedom.

Particularly culpable here are the official historians who have for generations heralded FDR as the great savior. It is a case study in how a civic lie can appear and fester for decades. The fact is that the New Deal did not work. It prolonged what might have been a troubling two-year downturn into a horrifying blow to world prosperity that ended up in a war that killed countless millions. It was one of the greatest acts of wreckage in world history.(Yea that is pure and utter nonsense.-AM)

And Obama is inspired by this? He wants to repeat it?(Methinks he would like very much not to repeat it.- AM)

I'm not so cynical about human affairs that I believe that errors must be endlessly repeated. Obama can put a stop to his madness. He needs to know — someone must tell him frankly and openly — that his current path is going to lead not to recovery, but to an extension of suffering, and untold amounts of it.(Is he Obama SmartyPants or Obama NancyPants? My context is different then Charlie Conservative though... will Barry bust up the banksters and let the free market reboot? Yea the markets will go down but we'll be able to more quickly take the elevator back up. - AM)

The biggest threat facing the American economy right now is rarely even discussed. It is the massive buildup of paper bank reserves in the last quarter of 2008. This was Bush's doing. He ordered the Fed to print like mad. Fortunately for us, the banks are still holding on to these reserves. When they start lending again, the result could be hyperinflation of Confederate-dollar proportions. (The Guinness Book of World Records is currently researching where the largest mop in the world is... - AM)

Hence the priority of the Obama administration should be to first do no evil, and second to find some means for withdrawing those reserves from the banking system before they wash through the economic structure and destroy the dollar. There is still time. He must act. Yes, that will lead to bank failures. That's good! It will lead to business failures. That's good and essential too.(Roger that.- AM)

There simply is no choice. If he acts now, he could find that recovery will come before his second term. This is precisely what happened with Reagan. He was fortunate to have advisers who insisted that he let the liquidation happen rather than attempt to fix the recession of 1981–82 with huge new government spending programs.(I would have to start a political blog to adequately flesh out the utter idiocy of this statement.- AM)

In any case, the hardest work to do here is intellectual. Obama's head is filled with myths and lies, not only about FDR and the New Deal but also about the government's power to repair the existing economic problems. With this model in his head, he can only do evil. This must change.(Well I for one am considerably amused by the conservatives acting like a bunch of Protestants that have confessed their sins and now are ready to walk the path of the righteous. As a social liberal and fiscal conservative... I buy into the Austrian concept of let the market take care of the malinvestments but when they jump into politics they become nothing more than shills for the mind-numbing bankrupt ideology that drafted the inner monologue of regular folks with incessant lies thus getting them to vote in a fashion entirely not in their self interest. And look what all of that caused... Hoocoodanode? I say that as a patriotic capitalist and if you don't see the connection you were, perhaps unwittingly, part of the problem. - AM)

Nothing is inevitable. He can turn on a dime. The main message: do not repeat the actions of FDR, lest you destroy what is left of American liberty and prosperity.(If it wasn't for FDR, your grandma would probably be eating cat food. - AM)