RoR: Forum

Most of the problems of inflation pointed out here are caused by the Federal Reserve, not Obama. Wasn't the interest rate brought to nearly zero much earlier than Obama was elected? Not to say that Obama's administration hasn't increased spending.

Post 1

Wednesday, February 16, 2011 - 4:46pm

I have no problem with sharing blame with other politicians. Yes, some of the problems started before Obama, but he has made it all much, much worse and is the current problem to getting good changes.

As to the Fed, it prints money but only to cover spending Obama (and those before him) and to monetize debt. They are driven by the politicians.

My understanding of why the interest rates were dropped (which was a process that began under Bush) was in an attempt to stimulate the economy, which was contracting in response to the governments continuing tax and regulate policies. Under normal Fed procedures it always follows the letdown after any large bubble bursts. The government is adverse to letting businesses go bankrupt since it gets in the way pretending that everything is perfect. And the special interests, like Goldman Sachs, do quite well when they are able to belly up to the cheap-loans window at the Fed. They can buy other banks that are in trouble for pennies on the dollar, and they can also buy Treasuries on loans that have lower interest rates than what the treasuries pay.

Post 2

Wednesday, February 16, 2011 - 5:51pm

Haha, I'd agree that Obama has made things much worse. I think that what we are seeing so far is mainly due to the politicians and the Fed of previous years. We and other Austrian economists identify that his actions will lead to decreased production and increased waste/consumption. :) I doubt we have yet felt the effect of what Obama has done. :(

Post 3

Sunday, February 20, 2011 - 10:09am

There is a herculean debate going on in Congress right now, attempting to reduce a 3.73 trillion dollar budget to 3.67 trillions dollars.

This is being characterized as Draconian cuts.

The deficit is about 1.5 trillion dollars.

The Dems have won this one, it is still pedal to the medal, all the way, until the gears literally grind and the sparks fly.

My pipe dream:

1] Toomey's proposed legislation passes, and is signed into law(making debt service the 'first to be paid' obligation of the government.) This would have the effect of avoiding any potential default on government debt, a shoring up of the 'full faith and credit of the US Govt.'

2] A failure to raise the debt ceiling.

The result of the above would be, a massive trimming of government, without any default. Nighly caravans of moving vans heading out of DC. Government contractors/vendors demanding in the future to be paid in advance, no terms offered to the government except by the truly desperate and willing to gamble again.

The result would be, no means of increasing the deficit.

The result would be, a massive contraction of federal government as the only possible response.

Pipe dream, never happen. Which exposes the fallacy that our politicians are serious in the least about reining in this pig.

3.67 trillion vs 3.73 trillion in the face of a 1.5 trillion deficit?

Are you kidding me?

Are you kidding me?

Post 4

Monday, February 21, 2011 - 7:46am

3.67 trillion vs 3.73 trillion in the face of a 1.5 trillion deficit?

:-) "There's not a dime's worth of difference between the Republicans and Democrats." -- George Wallace

Post 5

Monday, February 21, 2011 - 9:43am

There is a herculean debate going on in Congress right now, attempting to reduce a 3.73 trillion dollar budget to 3.67 trillions dollars.

This is being characterized as Draconian cuts.

A 1.5% cut is characterized as "Draconian"???

The socialists in England just cut their government (healthcare excluded) by around 20.0%! I mean what kind of super-collectivists do we even have in powerful political positions in this country?

Ed

Post 6

Monday, February 21, 2011 - 1:52pm