History about to repeat; are you ready?
I was reading the wikipedia page in the New Deal today (http://en.wikipedia.org/wiki/New_Deal); it makes for fascinating reading. In particular, if you massage the timeline a little, and replace FDR with Obama, you get a fairly accurate representation of what's likely to be the case in about 6 months. Which makes the New Deal a fairly good model of what the government is likely to enact to try to pull us out of the current mess they have created.
Let's look at the surviving long-term programs from the New Deal:
Social Security
This Ponzi scheme is the pride and joy of the New Deal, providing retirement and disability benefits for all Americans. It will be bankrupting the country around 2040 if not substantially modified/abolished before then, because it's a financial disaster which is a Ponzi scheme. I think we can count that as a negative outcome.
The FDIC
This institution provides insurance to prevent runs on banks, and establishes rules to prevent them from over-leveraging and becoming insolvent. The oversight has been laughable, but it has been reasonably successful at preventing bank runs, not counting the bank runs when banks fail. On the downside, it's woefully short of funds when banks actually fail, so it costs taxpayers billions. Overall, a push.
The FHA
This is the organization currently wasting billions of taxpayer dollars giving out ridiculous 100% LTV loans, and is supposed to be helping affordability in the housing market. So, a complete and utter failure of an organization.
The SEC
On the upside, created uniform investment and disclosure rules to prevent market manipulation and ensure a free market for investment. On the downside, laughably fails at oversight, company financial disclosures are incredibly obtuse and off balance sheet investments are rampit, and sometimes participates in market manipulation itself. So on balance, probably another push.
What's really interesting about the parallel, though, is not so much all the failed socialism programs which were enacted during the time (some of which are still around and still failing), but how utterly unsuccessful they all were in reviving the US economy. Not surprising, in hindsight, that you can't jump-start a capitalism-based economy with socialist programs and government spending, and the government is pretty bad at running businesses (although that lesson seems forgotten regularly by socialism proponents).
No, what's really interesting is the thing which finally brought the US out of the depression was WW2, which forced the country to go back to the businesses they had been stepping on and berating as evil, and beg them to produce again. That created jobs, trained workers, got rid of red tape, pushed money into the private sector, halted government controls, and basically suspended all the socialist programs which were dooming the country to malaise. I suspect we'll need a similar large-scale event to pull the country out of the mess Obama is likely to create trying to socialize the country, which leads me to wonder if the world will survive another world war.
However, I'm probably getting ahead of myself. There were ~10 years of failed socialist policies between the market correction and WW2, and you never know if/when the external event will come which will save us from the politicians and their policies. In the meantime, we the people need to find a way to survive as best we can, with as many of our rights and as much of our well-being intact as possible. Fortunately, in this case, we have a spot-on historical parallel to learn from, and we're about to go through the exact same motions which turned a market correction into the Great Depression. Are you ready?
Let's look at the surviving long-term programs from the New Deal:
This Ponzi scheme is the pride and joy of the New Deal, providing retirement and disability benefits for all Americans. It will be bankrupting the country around 2040 if not substantially modified/abolished before then, because it's a financial disaster which is a Ponzi scheme. I think we can count that as a negative outcome.
This institution provides insurance to prevent runs on banks, and establishes rules to prevent them from over-leveraging and becoming insolvent. The oversight has been laughable, but it has been reasonably successful at preventing bank runs, not counting the bank runs when banks fail. On the downside, it's woefully short of funds when banks actually fail, so it costs taxpayers billions. Overall, a push.
This is the organization currently wasting billions of taxpayer dollars giving out ridiculous 100% LTV loans, and is supposed to be helping affordability in the housing market. So, a complete and utter failure of an organization.
On the upside, created uniform investment and disclosure rules to prevent market manipulation and ensure a free market for investment. On the downside, laughably fails at oversight, company financial disclosures are incredibly obtuse and off balance sheet investments are rampit, and sometimes participates in market manipulation itself. So on balance, probably another push.
What's really interesting about the parallel, though, is not so much all the failed socialism programs which were enacted during the time (some of which are still around and still failing), but how utterly unsuccessful they all were in reviving the US economy. Not surprising, in hindsight, that you can't jump-start a capitalism-based economy with socialist programs and government spending, and the government is pretty bad at running businesses (although that lesson seems forgotten regularly by socialism proponents).
No, what's really interesting is the thing which finally brought the US out of the depression was WW2, which forced the country to go back to the businesses they had been stepping on and berating as evil, and beg them to produce again. That created jobs, trained workers, got rid of red tape, pushed money into the private sector, halted government controls, and basically suspended all the socialist programs which were dooming the country to malaise. I suspect we'll need a similar large-scale event to pull the country out of the mess Obama is likely to create trying to socialize the country, which leads me to wonder if the world will survive another world war.
However, I'm probably getting ahead of myself. There were ~10 years of failed socialist policies between the market correction and WW2, and you never know if/when the external event will come which will save us from the politicians and their policies. In the meantime, we the people need to find a way to survive as best we can, with as many of our rights and as much of our well-being intact as possible. Fortunately, in this case, we have a spot-on historical parallel to learn from, and we're about to go through the exact same motions which turned a market correction into the Great Depression. Are you ready?
No, I'm not ready, but I'm glad that there are places like this where a conversation of many can take place. They didn't have the Internet in FDR's time.. hmmm...
ReplyDeleteUnfortunately, although the increased communication mediums are great, I don't think it's going to help us avoid repeating history. It's not like the politicians are not historically informed, or the voters have gotten any smarter or less likely to behave like a reactionary herd. It's also not like the socialists promoting "change" and "new directions" are much different than those in the 1930's either.
ReplyDeleteHope may spring eternal, but pragmatism dictates we prepare for 4+ years of socialism reforms, and hope the country as we know it survives. To paraphrase, "so this is how capitalism, the free market, and prosperity die... with thunderous applause..."