Wednesday, August 18, 2010

Barack Obama accused of making 'Depression' mistakes

This is from last year but I find it interesting that a Nobel Economic science laureate, James Buchanan, sees similarities between what Obama is doing and what happened in Argentina. Lets hope he's wrong. Around here (were people are used to loosing their belonging) we often say that hope is the last thing you lose. 


FerFAL


Barack Obama accused of making 'Depression' mistakes

Barack Obama is committing the same mistakes made by policymakers during the Great Depression, according to a new study endorsed by Nobel laureate James Buchanan.

By Edmund Conway
Published: 9:55PM BST 06 Sep 2009

http://www.telegraph.co.uk/finance/economics/6147211/Barack-Obama-accused-of-making-Depression-mistakes.html

History repeating itself? President Obama     has been accused by some economists of making the same mistakes policymakers in the US made in the Great Depression, which followed the Wall Street crash of 1929, picturedPhoto: AP


His policies even have the potential to consign the US to a similar fate as Argentina, which suffered a painful and humiliating slide from first to Third World status last century, the paper says.
There are "troubling similarities" between the US President's actions since taking office and those which in the 1930s sent the US and much of the world spiralling into the worst economic collapse in recorded history, says the new pamphlet, published by the Institute of Economic Affairs.

In particular, the authors, economists Charles Rowley of George Mason University and Nathanael Smith of the Locke Institute, claim that the 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 US 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 US 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."
Although the authors support the Federal Reserve's moves to slash interest rates to just above zero and embark on quantitative easing, pumping cash directly into the system, they warn that greater intervention could set the US back further. Rowley says: "It is also not impossible that the US will experience the kind of economic collapse from first to Third World status experienced by Argentina under the national-socialist governance of Juan Peron."
The paper, which recommends that the US return to a more laissez-faire economic system rather than intervening further in activity, has been endorsed by Nobel laureate James Buchanan, who said: "We have learned some things from comparable experiences of the 1930s' Great Depression, perhaps enough to reduce the severity of the current contraction. But we have made no progress toward putting limits on political leaders, who act out their natural proclivities without any basic understanding of what makes capitalism work."

15 comments:

Don Williams said...

1) It was the "laissez-faire economic system " advocated by the authors which got us into this disasterous Great Recession.

The financial deregulation that Bill Clinton, Larry Summers and Robert Rubin pushed through in 1999 in partnership with Republican Senator Phil Gramm and Alan Greenspan.

2) We would not leave national defense up to the mysterious "hidden hand" of the mythical "free market" and we can't leave the economic system on which 300 million people depend to mercy of predators and their politcal prostitutes.

Government fails when it is run by corrupt prostitutes --not because it is inherently wrong. The solution is to exterminate the prostitutes --who infest both American political parties.

3) The financial regulations enacted by FDR gave the USA 55 years of solid growth, prosperity, and stability. It wasn't until Bill Clinton destroyed them in 1999 that we went back to the crash and burn economies that had plagued the USA prior to FDR (Panic of 1907, Great Depression starting in 1929,etc.)

See "The Two Trillion Meltdown" by
Charles Morris. It ain't a two-minute ideological soundbite -- but Reality seldom is.

http://www.amazon.com/Two-Trillion-Dollar-Meltdown-Rollers/dp/1586486918

4) Obama's problem is not that he is a socialist -- it is that he is too deferential to the rich men who dumped $750 Million into getting him elected. Do you think they did that for the benefit of the common citizens?

Don Williams said...

1) I agree that the government often hurts us --but it is the only force with the power to stand between us and far more malign predators. It needs our votes --those predators do not.

2) Inless you think that Goldman Sachs executives --who helped throw 8 million Americans out of work, 1.35 million out of their homes, and who then divided up $16 Billion in bonuses handed to them directly from the US Treasury at a mere cost of a $1 million Obama campaign donation -- are going to be looking out for the little guy.

Anonymous said...

I don't know the exact details of BOs mistakes, but over the past year, I've really wondered about the justifications for decisions made in regards to the U.S. economy.

If I didn't know better, these decisions are made to WORSEN the effects of our situation - there is no other explanation for it, they are deliberately crashing the economy.

Don Williams said...

PS At this point, I'm kinda seeing some merit in Vladimir Lenin's economic policy:

http://www.loc.gov/exhibits/archives/ad2kulak.html

Anonymous said...

Don, you sound like a Marxists. I think your full of it. So much of what you said is incorrect.

Saying the corporatism of the Bill Clinton administration was "laissez-faire" is ridiculous.

If only we could get the right people to run the whorehouse, eh?

There are a great many articles on the internet that refute what you're saying, especially the part about what ended the last Great Depression. See - Prof. Robert Higggs for starters.

FDR Was Wrong All-Around

http://www.lewrockwell.com/higgs/higgs60.html

and Prof. Murphy:

The New Deal Debunked (again)

It is a myth that Franklin D. Roosevelt "got us out of the Depression" and "saved capitalism from itself,"

http://mises.org/daily/1623

and this too:

Did FDR Make the Depression Great?

http://mises.org/daily/3448

russell1200 said...

The Locke Foundation is not neutral observer. They are your typical know-nothing economists. Not to be confused with the know-nothing economists on the other side.

The deregulation goes back further but it is generally true that much of it occurred under Clinton.

Clinton deregulated and Bush refused to regulate.

FDRs new deal may not have got us out of the Depression, but it did keep us from going the route of Nazi Germany, or Mussolini's Italy. Instead of giving money to banks, he gave it to people for actual work produced. I don't think Obahma's current policies have much in common with the New Deal.

Oddly enough, one of the reasons that some of the New Deals programs were implemented so quickly and efficiently was because General McCarther (I think he was Army Chief of Staff) organized them.

The Great Depression occurred because there was a huge multi-faceted bubble that burst. It actually was not quite as large as our most recent bubble, but it came close.

Anonymous said...

More likely WWII was responsible for complete recovery from the depression.

Luckily Iran is a good candidate for a new military 'stimulus plan'.

Bones said...

Don shows his true colors at last by openly admiring Lenin. "Bloodsuckers" was a euphemism for Jews, BTW. Gonna post some Hitler quotes next?

The economic/governmental system that actually works could be described as capitalist democracy - one in which an limited elected government uses regulation to prevent capitalist excesses while generally refraining from government social engineering.

Every tax dollar spent by the government must first come from a business that is turning a profit. Central control of the economy never works and the government is not needed to tell people how to live. Keynes is dead and should stay dead.

FerFAL said...

ok guys, calm down.

FerFAL

David said...

World War 2 got the US out of Depression? This is a testament to how utter stupidity, if repeated enough, gains currency. WW2 eliminated unemployment (by drafting 3 million men) but living standards didn't begin returning to normal until 1946/7. Claiming WW2 got the US out of depression is like proposing to burn down a million houses to end today's housing downturn.

FerFal, Don Williams may believe whatever he wishes, but it should be fair game to highlight just how evil and wrong are his conclusions. His views are a perfect blend of Stalin, Mussolini, and FDR (who was a corporatist and Fabian socialist). These views led to the deaths of millions of people.

Don Williams said...

1) I won't get into swapping invective, but it is important
for a survivalist analyzing the political environment to focus on the FACTS. That is the only way to see through the deceit of politicans.

2) For example, Bones is wrong to argue that Lenin persecuted Jews. Many Russian Jews supported the Communist Revolution because of the Czars' pogroms against the Russian Jews. Many major Communist leaders --like Lenin's deputy Trotsky --were Jewish.

The international Jewish community --like the extremely wealthy
American Jew Jacob Hirsch Schiff -- also supported the Communist
overthrow of the Czar. It was this support which led the Czar's secret police to create the anti-Jewish propaganda
"The Protocols of the Elders of Zion".
http://en.wikipedia.org/wiki/Jacob_Schiff

3) Re Bones' reference to Hitler, Hitler would have been incredulous
at Bones' suggestion that Lenin was against the Jews. Hitler' main
political argument was that the German Communists were a tool of enemy Russia and that the Jews ran the German Communists.

4) It is true that Stalin --AFTER Lenin's death -- turned against
some individual Jewish leaders who were rivals for power --like Trotsky.
But Jewish American Julius Rosenberg said at his trial that he had given Stalin the Atomic Bomb designs from the Manhattan Project because Stalin had given refuge to Jews fleeing from Hitler.

5) Bones' incorrect history is an artifact of current US politics.

In the past decade, US Republican leaders like Rupert Murdoch have made much of their love for Jews -- that is why the Great Iraq Oil Grab was cast as a defense of Israel. Republican plutocrats hate Commies --hence, Commies must be the enemy of Jews, same as the "Islamofascists".

But the Republican Plutocrats don't really care about the Jewish
American community -- who are too small as a group for their votes
to matter, who are too liberal, and most of whom are merely middle
class and hence make small political donations.

The Republicans leaders are really courting a few Jewish billionaires
who currently are big donors to the Democratic Party -- people like
Israeli billionaire Haim Saban.

Haim gave $15 Million to the Democratic Party in 2000-2002 and was credited by DNC Chairman Terry McAuliffe with having "saved the Democratic Party". It was a think tank funded by Haim Saban who promoted the "Saddam is building nukes!" story among Democrats-- who would never have believed a word George W Bush said.

Republican billionaires see Saban as a potential ally because Saban doesn't like to pay taxes any more than they do.

See http://en.wikipedia.org/wiki/Haim_Saban .

Don Williams said...

(continued)

5) Bones' incorrect history is an artifact of current US politics.

In the past decade, US Republican propagandists like Rupert Murdoch have made much of their love for Jews -- that is why the Great Iraq Oil Grab was cast as a defense of
Israel.

Republican plutocrats hate Commies --hence, Commies must be the enemy of Jews, same as the "Islamofascists".

6) But the Republican Plutocrats don't really care about the Jewish
American community -- who are too small as a group for their votes
to matter, who are too liberal, and most of whom are merely middle
class and hence make small political donations.

7) The Republicans leaders are really courting a few Jewish billionaires who currently are big donors to the Democratic Party -- people like Israeli billionaire Haim Saban.

Saban gave $15 Million to the Democratic Party in 2000-2002 and was credited by DNC Chairman Terry McAuliffe with having "saved the Democratic Party". It was a think tank funded by Haim Saban
who promoted the "Saddam is building nukes!" story among Democrats-- who would never have believed a word that George W Bush said.

8) Republican billionaires see Saban as a potential ally because Saban doesn't like to pay taxes any more than they do.

See http://en.wikipedia.org/wiki/Haim_Saban .

Anonymous said...

Heh - I'm calm.
It just seems like I'm not.

I hope people read the links and learn.

Until then I guess the motto of, "the other side" is:

"Everything for the state, nothing outside the state, nothing above the state."

David said...

Don, I suggest you consider historian Ralph Raico's analysis of Lenin, Trotsky, et. al.

http://mises.org/daily/4515
Trotsky: The Ignorance and the Evil

http://mises.org/daily/4322
The Taboo Against Truth

I think, Don, you may find facts that both back and challenge your stated positions, but in the end what we see is that all the "leaders" of that time were history's greatest mass-murderers. If this blog is about "surviving," job #1 is to avoid being murdered by YOUR OWN COUNTRY'S RULERS.

While you're lionizing FDR, consider John T. Flynn's contemporary analysis of him:
http://mises.org/misesreview_detail.aspx?control=49

http://mises.org/daily/2886
(this is the current forward of "The Roosevelt Myth" by Flynn.)

http://www.independent.org/pdf/tir/tir_01_4_higgs.pdf
Regime Uncertainty: Why the Great Depression Lasted So Long and Why Prosperity Resumed after the War

Anonymous said...

Government intervention caused the Great Depression.

The idea that FDR and his new deal saved the country from the Great Depression is a myth.

It is a very strong myth that anyone who disagrees is considered a heretic.

Yet another reason the public schools generally do not teach economics.

Economically illiterate people are very easy to manipulate as we can see here.

Learn some real economics and you will amazed. . .