It is no secret that the economy is in shambles, and to celebrate Obama’s 100th day in office today, it’s time to closely examine our new President’s economic policy. In early February, Obama signed his $787 billion dollar “stimulus” bill, loaded with bailouts, subsidies, and public works projects.
With this type of legislation, Obama boasts that he is revitalizing the legacy of FDR, who supposedly got us out of the Depression with his same “stimulus” mixture of government waving its magic wand over the economy.
Obama’s “stimulus” bill will likely work just as well as FDR’s, and that’s definitely a bad thing for the American economy. One of the biggest myths in American history is that FDR’s policies got us out of the Great Depression.
FDR did not get us out of the Depression, he made it worse. Much worse. Unemployment grew every year that he was in office until 1941 (when he “solved” the problem of 11-million-unemployment by shipping 12 million Americans overseas to Europe and Asia. Over 400,000 of them never came back). The New Deal failed as a matter of economic policy, but it was successful at buying FDR lots and lots of votes. FDR was reelected overwhelmingly in 1936 and again in 1940 in part due to the support of the big-city machines, organized labor, and other constituencies that benefited disproportionately from New Deal spending.
For example, the South and the Midwest were the two parts of the area hit hardest by the Depression, but they voted solidly Democrat. So a larger chunk of federal spending was sent to states where FDR had won by slim margins, on large industries, and on areas with large farms.
The idea that government spending can restore an ailing economy ignores the fact this spending at best only diverts precious capital and resources away from the infinitely more efficient private sector. It wasn’t until 1946, when government spending and taxes were simultaneously slashed, that the U.S. got out of the Depression. 1946, in fact, was and is still the most productive year in American economic history. The private sector was left (somewhat) to its own devices, and we stopped building dams and bombs and got back to making cars, tools, and appliances.
Obama’s “stimulus” makes FDR’s look modest in comparison, and its repercussions are likely to have an even worse result.
And where, as very few people ask, does this $787 billion dollars come from? How does a broke and debt-ridden empire pay for this?
To finance this spending, the government is simply printing up the money, Monopoly-money style. The Federal Reserve borrows money against itself, creates wealth out of thin air, and starts handing it out; in other words: massive inflation. Inflation decreases the value of our dollar, especially to the poor and middle class, whose incomes get hurt the most by this rip-off.
Obama’s “stimulus,” just like FDR’s (and Bush’s mini-“stimulus,” passed before he abdicated the throne) will do the exact opposite of what it intended to do. It will drive us further into debt, subsidize Wall Street at the expense of the average taxpayer, devalue our money, and will stifle healthy production.
Change? Hope? Don’t bet your (worthless) money on it.