Monday, September 17, 2012

What Is To Be Done? The Conservative (Reagan-Palin) Answer To The Coming Economic Crisis

The Wall Street Journal has an article examining the current state of America's economy with particular reference by The Federal Reserve Banks' Ben Bernanke's latest announcement of further "quantitative easing."

The authors the article entitled  "The Magnitude of the Mess We're In" George P. Shultz, Michael J. Boskin, John F. Cogan, Allan H. Meltzer and John B. Taylor are a distinguished group: "The authors are senior fellows at Stanford University's Hoover Institution. They have served in various federal government policy positions in the Treasury Department, the Office of Management and Budget and the Council of Economic Advisers."

This opening paragraph gives an indication of the gigantic size of the debt problem and the article continues on to describe, in straightforward non-polemical fashion the dangers inherent in the magnitude of the debt.

"Did you know that annual spending by the federal government now exceeds the 2007 level by about $1 trillion? With a slow economy, revenues are little changed. The result is an unprecedented string of federal budget deficits, $1.4 trillion in 2009, $1.3 trillion in 2010, $1.3 trillion in 2011, and another $1.2 trillion on the way this year. The four-year increase in borrowing amounts to $55,000 per U.S. household."

I strongly commend reading the whole post and the subsequent comments from the public. They are of course more on the polemical side, but I note, as does one commentator, that there are no defenders of the Obama administration, or Bernanke's policy from anyone who makes an observation on the main article.

The authors concluding prescription is what I consider to be the correct (although painful and politically difficult) one. It is also what I believe to be a Palinite prescription. It may be that, as a reader suggests, it will be better if President Obama is re-elected so that when the economic dislocation ensues voters wil be ready to accept whatever conservative mechanism is required to right the economy-no matter how challenging.

They clearly are not ready to accept it quite yet as the printing press has not reached inflationary saturation point yet, which, if it comes, will be very painful and of course destructive to the middle class and all savers. For those of a more doomsday scenario taste Peter Schiff, who covers some of the same ground and conclusions at The Market Oracle  AT THIS LINK may be more to their liking

Here is the concluding comment AT THIS LINK which would have sounded good coming from President Reagan, and would sound just as good, sensible and correct, coming from 2016 candidate Palin;

"The fixes are blindingly obvious. Economic theory, empirical studies and historical experience teach that the solutions are the lowest possible tax rates on the broadest base, sufficient to fund the necessary functions of government on balance over the business cycle; sound monetary policy; trade liberalization; spending control and entitlement reform; and regulatory, litigation and education reform. The need is clear. Why wait for disaster? The future is now."

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