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The heart and soul of Obama-nomics 

7/28/2012

2 Comments

 
The heart and soul of Obama-nomics 

(Why the Obama economic recovery plan failed)

For years now, I've heard president Obama referred to as a communist, a socialist and probably a half dozen other titles designed to outrage and insult. Titles that probably aren't all that accurate. For you see, Mr. Obama is a Keynesian. Don't be outraged, half the politicians in Washington (and elsewhere) are Keynesian as well. Ben Bernanke, chairman of the Federal Reserve Bank, is one as well.

What is a Keynesian and how did it make all of Obama's efforts futile? 

Keynesian refers to the philosophy of economist John Maynard Keynes (I've heard it pronounced both Keens and Canes). What was his big idea? To paraphrase from his book, General Theory:

Saving is stupid; people have been saving money for 6,000 years and where has it gotten them? Nowhere.

He believed that for an economy to prosper, cash has to flow through it, not be squirreled away for a rainy day. So interest rates on savings should be kept as low as possible to discourage it. Interest on loans should also be kept low to encourage borrowing. Keep that money flowing, even if it isn't your money. And if there's a contraction to the economy, it's the government's job to spend even more to keep that cash flowing. Staggeringly large amounts. Again, even if it has to be borrowed money. ANYTHING to keep the cash flowing.

So, now you know the heart and soul of Keynesian economics and Obamanomics, since they're one in the same.

This isn't just an American phenomena, it's world-wide. For some reason, Keynes has been the guiding principle behind nearly every economic decision in the past 60 years. The only possible reason that I can conjure for the popularity of this lunacy is that it allows politicians to appear pro-active; they can look like they're DOING something. Once you know what Keynesian looks like, you can begin to recognize it.

Your passbook account doesn't pay 5.25% anymore, does it?
What's your mortgage rate?
Remember Obama's big economic stimulus?
How about the Fed's quantitative easing? Pouring dollars into the economy.
FDR's various government jobs and spending programs.

In 1983 when the stock market took a particularly viscous drop, president Reagan was asked what he was going to do about it. His reply, “The stock market goes up, the stock market goes down.” I wish more politicians could understand that in time markets will straighten themselves out, government only impedes the invisible hand of supply and demand. 


Tim Fullerton
2 Comments
Eric
8/11/2012 08:44:19 am

Because the economy grows SO MUCH MORE when the rich hoard the money.

(rolls eyes).

This is the basic problem with the Tea Party: they have absolutely no concept of COMMUNITY. They DEMAND the right to "keep their money", while talking about how easy the poor have it; not understanding nor caring that they are rich off the backs of those same poor people they seem to hate.



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Jackson link
10/17/2013 10:48:06 pm

Seeing so many great reviews of this blog, I thought I would also make a comment and let you know that I really enjoyed reading this blog. There are some strange comments, but for the most part I agree with what the other reviewers are saying.

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