by Mark Luedtke
Day after day for nearly a year, President Obama has trotted out Treasury Secretary and tax cheat Tim Geithner, Federal Reserve chairman Ben Bernanke and an army of Obama-economists to claim the economy is recovering, and Obama's mainstream media cheerleaders dutifully parrot all the president's men. It's a powerful propaganda campaign. Unfortunately these are the same guys who told us the economy was strong in 2007. These are the same guys who didn't see a housing bubble until it collapsed. They didn't see a financial crisis until Lehmen Brothers collapsed. These economists have three things in common - they were wrong then and they are wrong now.
Leftists pay lip service to diversity, but they hate diversity of ideas. The third thing these economists have in common is they're all brainwashed in Ivy League Keynesian economics. Only a government employee - including academics - can be wrong over and over, wrong every time, and keep his or her job. The professional politicians tell us these people are experts, but they have a different definition of expert than the rest of us. Outside of Washington, expert means a person who has an extensive track record of success in his field. Captain Sully is an expert pilot. James Cameron is an expert movie maker. Government economists - including academics who are almost exclusively funded by government - are political hacks posing as experts. They get paid to tell the politicians and the people what they want to hear, not what's true. And this doesn't apply just to Democrats. George Bush's economic advisers were all brainwashed Ivy League Keynesians too, and that's why they also failed to foresee the economic collapse.
In 1936, John Maynard Keynes published The General Theory of Employment, Interest and Money which basically said that during recessions, governments can return the economy to full employment by borrowing and printing money then spending it. Keynes claimed the government could fix the economy by burying money in mines, filling them up, then allowing people to dig it up. When asked what happens in the long run when the debt can no longer be sustained, he famously replied, "In the long run we are all dead." Most economists at the time considered Keynes a kook, but the political class hailed him as a genius because his book provided pseudo-intellectual cover for their favorite activity, borrowing and printing money, looting the people, amassing debt, then spending it to expand their power.
Keynesianism didn't take off right away because Hoover and Roosevelt had been following Keynes's prescription since the crash of 1929, borrowing, printing, then spending money on public works projects, and that approach created the second then the third dip of what became the Great Depression. Keynesianism was tried again in the 1970s and resulted in 20 percent interest rates and 10 percent unemployment. It's been tried in Japan since the 1990s, called the lost decade in Japan, and Japan's economy still hasn't recovered. Keynesianism has failed every time it's been tried since the dawn of civilization, and it's doomed to fail this time because it flies in the face of the laws of economics. Because government spending diverts resources from solving the problems of the people to empowering and enriching politicians and their cronies, it invariably harms our economy and makes us poorer. But by controlling funding for academia, politicians made Keynesianism the dominant economic theory in academia, virtually every introductory economics textbook teaches it, and subsequently the world.
Keynesianism is the theory behind all the Bush-Obama stimulus boondoggles and bailouts. Fortunately Obama hasn't seized control of the internet yet, so we can learn alternative economic theories. The real experts from the Austrian school of economics at mises.org who predicted the current economic crisis, the dot.com bust, stagflation and the Great Depression are predicting we're racing toward a bigger crash than the crash of 2008, and some predict it will happen this year, possibly this summer. Ludwig von Mises developed the theory that artificially increasing the money supply drives the boom-bust cycle. With the exception of wars and natural disasters, all of America's economic downturns since 1913 were caused by the inflationary monetary policy of the Federal Reserve. Now Bernanke and central banks around the world are creating the biggest bubble ever, a sovereign debt bubble, enabling governments to spend like never before by printing money and buying government debt.
When the Greek sovereign debt problem became well known in April, their government asked for a $54 billion bailout. By the end of April, it was $145 billion. Sovereign debt chaos in Portugal, Spain, Italy and Ireland caused central planners to expand the bailout to $900 billion in May. Amassing more debt and printing funny-money can't solve a debt problem, and savvy investors know it. The Dow dropped over 1,000 points from 11,151 on May 3rd to just over 10,136 on May 28. Europe faces a bigger debt hurdle in July when Spain will have to raise money, but Spanish banks are failing. Additionally, US real estate hasn't hit bottom yet. Private investment is below pre-9/11 levels. Unemployment jumped to 9.9 percent in April. And China's real estate bubble is collapsing.
Economic freedom universally leads to increased prosperity, and increased government control of the economy invariably makes people poorer. There are no exceptions. Obama, Geithner and Bernanke, a student of the Great Depression, all know this, yet they're doing everything wrong. Every policy they pursue damages our economy further. They're repeating the mistakes of the Great Depression on an unprecedented scale, and they know it. We're following Greece, but nobody can bail us out. We're racing toward a bigger crash, and the only conclusion that makes sense is Obama and his allies are doing it to us on purpose.
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