Posted on 04/27/2009 2:19:02 AM PDT by Scanian
FDR's dictum "The only thing we have to fear is fear itself" may have been the 20th century's most inadequate piece of economic analysis. Did you ever wonder how acting on such a fantastic premise halts a financial collapse? Or exactly how refusing to be concerned about the financial condition of banks causes them to be solvent?
We can safely assume other factors rescue us from recessions and depressions. But what are they? The Obama team tells us the keys are "fiscal stimulus," aggressively easy monetary policy, and more robust regulation. Their argument is rather simple: when we have reacted to past economic downturns with these policies, we have always emerged with higher "real GDP" than before.
On the other hand, some supporters of free markets counter that the best policy for government is: Do nothing! Let the free market work things out! Yet, they can offer little statistical proof of this, given that the last administration that tried a hands-off policy was that of the scorned Warren G. Harding. (But that policy succeeded, too, apparently, since "real GDP" subsequently climbed.)
Why do government anti-recession measures (known as "doing something") meet with a chorus of approval, but few experts have the temerity to advocate benign neglect? Perhaps this is because most of us are not really sure how the free market cures cyclical economic distress.
To my mind, Pepperdine University economics professor George Reisman has recently clarified how recessions -- when free of government interference --
(Excerpt) Read more at americanthinker.com ...
In other words, what the Bush administration was doing, except when hamstrung by Democrats.
I fail to see how "agressively easy money policy" is going to solve what "agressively easy money policy" caused.
It sounds more like a way to rationalize huge slabs of pork -- while creating a paper GDP increase that evaporates when balanced against the massive inflation that dumping trainloads of money into the economy will cause.
Interesting to read the whole FDR speech:
http://historymatters.gmu.edu/d/5057/
Sound familiar? So may the next decade.
Not just any old pork either, but sops to peculiarly Democrat and lefty interests. Both parties have their favorites to steer to, but this is the most blatantly partisan example to date.
The ONLY thing that will stimulate an economy is de-regulation of business; it’s never happened in a Socialist State, and never will. Prognosis: not particularly optimistic.
On the other hand, if the curent administration doesn’t turn the economy around in three years or so, the Democrats can say “Bye bye” to their majority.
LLS
Facists don’t understand capitalism or wealth creation — they only control other people’s businesses until they fail. Don’t expect things to get better.
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