Has President Obama at last figured it out?
The President has been talking a lot of late about the bubble economy. Last month he mentioned “unstable bubbles” that threaten the economy, and the other day in his radio address he referred to “the bubble-and-bust mentality” that has made “a mess” of our economy.
We would feel better about Obama’s comments if there were any reason to think he has a clue about the role of the Federal Reserve in creating these bubbles and busts.
But experience teaches that the repeated use such terms and buzz phrases by party apparatchiks and presidents – Obama has talked bubbles four times in five days – means that they are nothing but focus-group tested talking points. Some research firm has been paid by the party to hook subjects up to machines and find out what words resonate with them by making their palms sweat and pupils dilate. That’s the high art of today’s politics.
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Do you suppose Thomas Jefferson used a focus group to test “We hold these truths to be self-evident…”?
It’s not entirely clear what the president means anyway. Buzz phrases and sweaty palms are poor substitutes for clear thought. The bubbles are visible enough, but recently Obama said, “When wealth concentrates at the very top, it can inflate unstable bubbles that threaten the economy.”
Then why has his administration driven the concentration of wealth, the bailouts of the influential, the sweetheart deals for the crony classes, and the monetary policies that have stove-piped money to Wall Street, enriching the banks while the people continue to suffer depression-era levels of unemployment and watch full-time jobs turn to part-time?
I think that Obama, as well as most Republicans, is a corporate statist, rather than a Marxist. That is the broad road to electoral success in America. But even so, the ghost of Karl Marx lurks somewhere in the president’s outlook. Marx held the view that a destructive cycle of booms and busts was inseparable from capitalism itself.
But the Austrian school economists – Mises, Hayek, Rothbard – have long since demonstrated that rather than capitalism, the boom and bust syndrome is the work of central bankers and their distortion of money and credit conditions.
Obama knows none of this.
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Focus-group tested talking points aren’t the only thing self-evident in the modern political process. So, too, is the lap-dog press, always subservient to its statist masters.
The newspaper account in which I read of the president’s radio remarks about “bubbles and busts” filled out the story with reference to the likely replacements for bubbling Ben Bernanke at the Fed: Janet Yellen and Larry Summers.
For a comment on these two peas in the short-list pod it turned to – of all people – a former Fed official!
And he offered that “both candidates can claim bubble-battling expertise.”
How is it that we’ve had more bubbles than Lawrence Welk and his Champagne Music Makers, what with the president and all these bubble-battlers bustling about?
Just this week the Federal Reserve’s purchases of U.S. government debt with money it just created out of thin air has topped an unthinkable $2 trillion! Add to that the $1.3 trillion in mortgage-backed securities it has purchased, taking toxic paper off the balance sheet of the banks and transferring it onto the account of the people’s dollar.
And thus wealth concentrates at the top.
The downward movement of bonds will only be exceeded by the upward movement of gold as this biggest-of-all-bubbles plays out.