Last week, President Obama made a speech in Ohio about the economy. Below are excerpts from the speech and reveals what we know about seasoned politicians — they want everyone to love them except their political rivals. President Obama also demonstrates a lack of understanding of the free market, the role of government in a free society, and what caused our financial crisis.
"The idea was that if we just had blind faith in the market, if we let corporations play by their own rules, if we left everyone else to fend for themselves that America would grow and America would prosper."
What is blind faith in the market? The market provides the goods and services the people want. Entrepreneurs produce goods to satisfy human needs — the essence of the free enterprise system. We therefore should applaud all the men and women who create products that are distributed through retailers and the Internet. In short, the free market "delivers" the goods people desire.
"And for a time this idea gave us the illusion of prosperity. We saw financial firms and CEOs take in record profits and record bonuses. We saw a housing boom that led to new homeowners and new jobs in construction. Consumers bought more condos and bigger cars and better TVs."
President Obama does not acknowledge the role the Federal Reserve played in manipulating interest rates throughout the 1990s and the past decade. The dotcom bubble of the 90s and the recent housing boom of were caused by the FED's easy money policies — policies that induced reckless borrowing and lending. Financial firms, especially on Wall Street, were the prime beneficiaries of easy money. Wall Streeters love easy money; that's why they support the FED, and do not want a return to hard money, a 100% gold standard, where speculation is minimal, because there is no central banking creating money out of thin air.
"Yes, our families believed in the American values of self-reliance and individual responsibility, and they instilled those values in their children. But they also believed in a country that rewards responsibility; a country that rewards hard work; a country built on the promise of opportunity and upward mobility."
Any politician could have made the above statement. Yet, the contradictions in this statement are monumental. If America is about self-reliance and individual responsibility, why did the federal government create a welfare state? Why do we have a progressive income tax, punishing people for earning more money? Why does the federal government conduct two Ponzi schemes — Social Security and Medicare? Why is government responsible for educating children? Why has the federal government subsidized the housing market, which helped create the housing bubble? In other words, if America is about freedom and independence, why is the federal government as well as state and local governments interfering so massively in the lives of the people?
‘Others believed on principle that government shouldn't meddle in the markets, even when the markets are broken. But with the nation losing nearly 800,000 jobs the month that I was sworn into office, my most urgent task was to stop a financial meltdown and prevent this recession from becoming a second depression."
Markets are "not broken." Massive intervention by the Federal Reserve and the federal government distorted the smooth functioning of the free market, sending signals that led to overbuilding in housing and misallocation of capital in other industries. The great recession is trying to restore the free market, but Obama's massive stimulus spending and Bernanke's virtually zero interest rate policy are preventing the economy from achieving sustainable prosperity
"We have a different vision for the future. See, I've never believed that government has all the answers to our problems. I've never believed that government's role is to create jobs or prosperity. I believe it's the drive and the ingenuity of our entrepreneurs, our small businesses; the skill and dedication of our workers-that's made us the wealthiest nation on Earth. I believe it's the private sector that must be the main engine for our recovery."
So get the federal government out of the way of the private sector. Phase out the departments of agriculture, commerce, education, energy, housing and urban development, health and human services, and transportation for starters. Eliminate the alphabet soup agencies that supposedly protect consumers but in reality protect the crony capitalism endemic throughout the country. And of course abolish the income tax.
"I believe government should be lean; government should be efficient. I believe government should leave people free to make the choices they think are best for themselves and their families, so long as those choices don't hurt others."
See my comments above. And of course bring the troops home from around the world and stopping policing the world and engaging in nation building.
"But in the words of the first Republican President, Abraham Lincoln, I also believe that government should do for the people what they cannot do better for themselves. And that means making the long-term investments in this country's future that individuals and corporations can't make on their own: investments in education and clean energy, in basic research and technology and infrastructure."
I love big government Republican presidents who support my vision of a statist America.
"That's what we Democrats believe in — a vibrant free market, but one that works for everybody. That's our vision. That's our vision for a stronger economy and a growing middle class. And that's the difference between what we and Republicans in Congress are offering the American people right now."
Huh? The free market does work for everyone...who works. See above.
"So this week, I've proposed a six-year infrastructure plan that would start putting Americans to work right away. But despite the fact that this has traditionally been an issue with bipartisan support, Mr. Boehner (House Minority Leader) has so far said no to infrastructure. That's bad for America — and that, too, is what this election is all about."
Why is the federal government involved in local and state road infrastructure projects? If the federal government taxed less, states like New Jersey that gets ripped off by the federal government could take care of its own needs.
"Now, I believe we ought to make the tax cuts for the middle class permanent. For the middle class, permanent. These families are the ones who saw their wages and incomes flat-line over the last decade — you deserve a break. You deserve some help. And because folks in the middle class are more likely to spend their tax cut on basic necessities, that strengthens the economy as a whole."
Yes, let's cut taxes for everyone so they can become self reliant and independent of government largesse. Spending by consumers does not strengthen the economy. Production strengthens the economy. Remove barriers to production — lower taxes, eliminate unnecessary regulations, etc. — and the economy will boom.