Obamanomics, Keynesian Theory, Red is the New Green & How It All Ties Together
Beware Of Obamanomics, Part One (of many)
After the close of WWI, the global economy, especially Europe, sank into a global depression. The United States, having been in the position of not having any combat take place came out of the war in decent shape economically. Unfortunately and eventually the global depression took hold in America. By 1920-21, the United States was in a grave position economically and in most cases was in worse shape than the beginning years of the Great Depression. New President Warn G. Harding took office that year facing double digit unemployment and a 21% decline in industrial production over a one year period.
That President, being what is now more commonly referred to as the Austrian School of Economics, told the Nation that in order to compensate for the artificial/credit induced boom of the war years, the debt, had to be faced up too. Basically what the President said was that its time to pay the piper saying, “... that no government, however wise, could make it disappear.”
“The economic mechanism is intricate and its parts interdependent, and has suffered the shocks and jars incident to abnormal demands, credits inflations, and price upheavals.... We must seek the readjustment with care and courage. Our people must give and take. Prices must reflect the recovering fever of war activities... All penalties will not be light, nor evenly distributed. There is no way of making them so. There is no instant step from disorder to order. We must face a condition of grim reality, charge off our losses and start afresh. It is the oldest lesson of civilization (my emphasis)... Any wild experiment will only add to the confusion. Our best assurances lies in the efficient administration of our proven system.” ~ Warn G. Harding.
What Warn G. Harding actually did to combat a forming depression was cut spending and cut taxes. No stimulus, no bailouts... nada! At that point, the Fed was a relatively “new” concept to Americans and thus took a passive stance to the early economic conditions of post war America. However, by cutting federal spending and cutting taxes, the recovery of the American economy had already begun by summer of Harding's first year in office. According to today's textbooks, Keynesian influenced, that was not supposed to happen, but it did. Latter on in the middle of the decade, in order to keep the economy booming, the Fed began to introduce its inflationary policies (artificial stimulation of the economy) that begot the fall out that was to come, The Great Depression.
In Obama's first press conference after taking office he said just look at Japan. Japan “... did not act boldly and swiftly enough and the consequences they suffered what was called the 'lost decade' where essentially for the entire '90s they did not see any significant economic growth.” The 'candidate of hope' went on to speak in apocalyptic terms of what would happen if America, namely the federal government, did not take on aggressive interventionists measures with our economy, saying at the very least we would feel an extended slump rivaling The Great Depression.
As usual and as all Keynesians do, our Presidential Messiah couldn't be more wrong in drawing a correlation between us and Japan during the '90s. Japan did act boldly and swiftly handing out tens of trillions of yen in stimulus packages, bailing out fiscally insolvent companies keeping them afloat, lowering interest rates near or at zero and including other various interventionist measures. At the end of the '90s, the only thing Japan had to show for it was being the most indebted country in the developed world. What most Keynesians attribute to the fact that the Japanese economy never responded will say, that they did not nationalize their banking sector fast enough. However, when Japan did, Japan experienced the worst two years of their 'lost decade' crisis ('98 and '99).
Shortly after taking office Obama introduced his stimulus package of $787 Billion saying that if it was not passed, “I could tell you with complete confidence, [that this] could turn a crisis into a catastrophe... that failure to act will only deepen this crisis as well as the pain felt by millions of Americans.” Simplified, draining resources from the productive sector, the taxpayers, of society and appropriating them arbitrarily to “projects” around the nation cannot improve an economy. So blinded to reality are Keynesian economist, socialists really, that they take the view that prosperity is attributable to “spending”. They even predicted that when WWII spending ceased, America would return to depression like conditions due to the fact that the spending was over and government budget had been or would be cut by 2/3. Fortunately for the American economy they couldn't have been more wrong as 1946 to this date was “the single most robust year the private economy has ever seen.” (Higgs, 2006).
Contrary to Obama, what we needed was not more spending but rather a sensible, civilization proven or time tested reaction of government cutting spending first and then taxes allowing the free market to observe the time tested practice of self correction. Simplified, the economy can be equated to a rubber-band that flexes and stretches in a positive and negative fashion. This is known as 'the business cycle'. It is representative of the stock market fluctuations. As we aggregate through an economic or business cycle the free market, un-manipulated, will have a natural up and down cycle. However, over time it will have a natural growth slope. When we allow Keynesian theory to be applied, such as that what the Federal Reserve employs, we are allowing artificial stimulation of the economy. The economy then acts like a rubber-band, that is, when pulled and stretched, it snaps back quite violently. The more interventionism (Keynesian-ism) applied to an economy, the harder that economy swings within its business cycles. Thus the boom and bust bubbles that we have become accustomed too, form and burst destroying lives and families.
Sneak peak... part two: Where the Bust Came From.
Part two will be focusing in on the housing bubble, how it formed and what it means now. There will be a total of seven parts to this series. If you like what you heard above or don't and just want to read with the attempt to discredit what is being said, please look for the follow up parts to this discussion every Friday until its completion. Thanks for reading. All sources of influence will be supplied at the end of part seven.
Peter Visclosky (D-IN), noted 
One person in Portage asked, "Why are you walking in lockstep with Obama, Reid and Pelosi on their radical agenda?"
And . . . I'm struggling to see what the threat was here that the cops had to intimidate a senior citizen for speaking her mind. Scared of little old ladies, Pete? (Oh, wait -- he probably sees Nancy Pelosi on a daily basis; that's pretty damned scary right there.)
He fought against occasional interruptions, which he pointed out came from people who had done the same at other forums. After one particularly heated exchange, a Valparaiso police officer edged through a doorway into the City Hall chambers. A second officer was stationed in the hallway.
