Skip to comments.Ford's Risky Plan Against Slumpflation
Posted on 01/30/2008 8:58:22 PM PST by logician2u
It was anything but the standard State of the Union speech. Instead of congratulating himself on the achievements of his young and troubled Administration, Gerald Ford adopted the somber tone of a wartime leader calling for an all-out effort to repel the enemy. Instead of skipping lightly over a broad spectrum of national and foreign policies, the President concentrated almost exclusively on specific means to counter the worst economic slump since the Great Depression, the nation's almost 14% rate of inflation and the U.S.'s dangerous dependence on cartel-controlled foreign oil. Displaying the blunt candor that is his most politically attractive quality, the President proclaimed himself the bearer of "bad news," declared flatly that "the State of the Union is not good," and announced that he did not expect "much if any applause."* Then he unfurled an economic and energy program of considerable scope, great complexity and huge risk.
Essentially, Ford plans a three-stage operation on the severely sick economy:
Stage 1: A quick infusion of $16 billion of new buying power—$12 billion to consumers in rebates on 1974 taxes, $4 billion to corporations in higher tax credits on purchases of new machinery.
Stage 2: Imposition of $30 billion in new energy taxes that will force every citizen to pay more to drive a car, heat a house or turn on a light switch.
Stage 3: Recycling of that $30 billion back into the spending stream, chiefly by permanent cuts in corporate and individual income taxes.
(Excerpt) Read more at time.com ...
Those of us who lived through the horrors of the late 1970s, when you had to buy what you needed quickly before the price went up - or before it was gone - can look back at the "stimulus package" that President Gerald Ford promoted in his 1975 SOU speech and wonder if history is repeating itself. Certainly we are still dependent on foreign oil, even if OPEC has lost some of its muscle. We still send our oil money to the nasty guys running Venezuela and the Arab countries. We still look for external enemies to blame for our domestic economic woes which, in most cases, are of our own doing.
At least we don't have consumer prices increasing at a double-digit clip, not yet. And interest rates are going down, not up, as the FED injects more money into the financial system to stem a presumed liquidity crisis.
Still, does having to borrow another $150 billion from the Chinese so American families will have another $300-$1200 to spend as they wish sound like a sound economic plan to stave off recession?
Or is this merely a precursor to what followed right behind the 1975 Ford tax rebates, inflation?
I ask your opinion.
I’m still waiting for my free cheese...
darn...I can’t find my WIN button.
LOL. It’s getting plenty moldy by now, I’d bet.
You know who Ford put in charge of WIN, don’t you?
With the tax receipts, it probably won’t really cost $150 billion (maybe $120) but you are right that it is unsettling with the amount of money the US government is spending/borrowing at the moment. Unfortunately, no one with a chance of winning either party wishes to significantly reduce the size and scope of the federal government.
So you are telling the old-timers what is going on? Good for you! (And to those crazies, history has a way, get over it)
Glad you qualified that, LOL.
***darn...I cant find my WIN button.***
The price of the buttons went up then.
It doesn't hurt to learn from history, though. Some idiot sergeant in my AF unit a few years back read a quote on the blackboard he didn't like and ordered that Airman Santayana report for counseling. We all had a good laugh over that one!
Some will see a parallel where none exists; others will see nothing similar. That's what makes a market. Some are right, most are flat wrong.
Ha! Ha! It’s called diplomacy and you know it. It’s time for the US to release wealth to the world. It shall take time to retrieve it.
Didn’t they give them away? In any case, I never got one and would not want to wear it anyway. Stupid, idiotic campaign.
Yeah, like when a little kid lets go of a balloon.
I’m selling my gold in about mid-july. (things work faster now than the 70’s) Buh Bye.
Also, in theory at least, higher prices now could lead to lower prices later. If their hold on Western economies was broken, the OPEC nations might cut prices in order to maintain sales. Unfortunately, they also could do just the opposite: they could take Ford's program as vindication of their past price increases and raise prices higher yet. Some Arab governments are willing to cut production in order to maintain prices; Kuwait last week reportedly decided to reduce output by 500,000 bbl. per day, or 20%.
Such thorough economic forecasting was undoubtedly an order of magnitude over what was going on at the Office of Economic Advisors, where Alan Greenspan was offering his anti-inflation remedies.
I would too, but my wife feels naked without it. Have to defer to her wishes.
I read your initial post and it rings true. The US is giving wealth away outside, on purpose. We struggle as peons yet financiers put their wealth in London Gold. Trust is at a premium. Gold will fall as soon as they know the US says enough.
I’m still waiting for my swine flu shot.
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