“Depression”-size economic blunders
A new study, endorsed by Nobel laureate James Buchanan, says that President Obama is committing mistakes similar to those that plunged the U.S. into the Great Depression 80 years ago. The paper, published by the Institute of Economic Affairs, speculates that the administration’s current policies have the potential to “consign the U.S. to a similar fate as Argentina, which suffered a painful and humiliating slide from First to Third World status last century.”
The Telegraph wrote about it on Sunday:
White House’s plans to pour hundreds of billions of dollars of cash into the economy will undermine it in the long run. They say that by employing deficit spending and increased state intervention President Obama will ultimately hamper the long-term growth potential of the U.S. economy and may risk delaying full economic recovery by several years.
The study represents a challenge to the widely held view that Keynesian fiscal policies helped the U.S. recover from the Depression which started in the early 1930s. The authors say: “[Franklin D. Roosevelt’s] interventionist policies and draconian tax increases delayed full economic recovery by several years by exacerbating a climate of pessimistic expectations that drove down private capital formation and household consumption to unprecedented lows.”
We have been reporting on the unsustainability of the U.S. economy for years, and recently pointed out the troubling similarities of our current plight to the lead-up to the 1929 financial crash:
The main difference this time around is in debt levels. The willingness of authorities to borrow and spend money has blown out all records. The world is spending money like it is going out of style. America alone has spent more money combating the recession than it has on any other event in history, including World War ii.
All the money might buy a little time—it might make the faux recovery last a bit longer—but it doesn’t change anything. A problem caused by too much spending and debt cannot be fixed by more of the same. Unfortunately, America looks like it is getting set up for a refrain. The excesses of the past two-plus decades have not been rectified during the past few short months. Money has been spent, but nothing fundamental has changed. More punishment is on the way. History is repeating; you can feel the rhythm. The crescendo awaits.
Herbert W. Armstrong, editor in chief of the Plain Truth magazine, wrote that a banking crisis in America could “suddenly result in triggering European nations to unite as a new world power larger than either the Soviet Union or the U.S.” (July 22, 1984). That was 25 years ago, before the creation of the European Union or the euro monetary agreement.
For information about the shift of investors from the dollar to the euro, and the facts about where our economic breakdown is leading, read “America’s Financial 9/11”.
