New World Order University Forum

NWOU offers a few thoughts and a few links on the global economic crisis for the confused. If you believe that more easy credit is the solution to a crisis brought on by easy credit, we refer you to a short article by Peter Schiff, who has been warning of a global credit crisis for months on his TV appearances: “The Party is Over.”

The debate over the wisdom of the Treasury bailout of banks, whether by investment or purchase of mortgages, is a political debate that hinges on one’s view of the Roosevelt administration and Keynsian economics. One either believes that government welfare programs and deficit spending made the Great Depression worse or saved the country from a potentially worse depression. The Democrats believe Roosevelt was a hero and deficit spending “saved” the economy. Unfortunately, both political parties now seem devoted to following this policy.

The argument against this policy is nicely stated by Steve Saville, “The Financial Crisis Will Soon Abate, But the Real Crisis Will Soon Begin.” Saville believes that trying to reinflate the economy simply deepens and lengthens the process of correction. The Great Depression was Great because it was the first time in history the U.S. government tried to prevent deflation as the natural correction to inflation. The proper response to the crisis is for the government to do nothing, to allow weak banks and corporations to fail and prices to find their level where people can afford to pay without credit.

If the government and the Fed do nothing, the price of an education will fall, the price of houses will continue to fall, and prices generally will fall. The various constituencies who have profited from easy credit will see their gravy train end, they will lobby Congress, and Congress will respond with more deficit spending “to help the people.” This policy buys votes and may temporarily raise prices, but it does nothing to stimulate saving. Savings are required as the basis for loans, but the U.S. is out of savings, and the new loans are all “funny money” based on nothing. Putting more money into circulation does not solve the underlying problem, that the U.S. does not save enough to justify the credit that is in circulation.

Speaker Pelosi recently complained that the Democrats who supported the bailout bill had been stampeded by Treasury Secretary Paulson’s tone of urgency. Paulson wanted the slush fund to bail out his friends on Wall Street. That is where the $700 billion+ will end up–at certain favored banks and brokerages. Bernanke, Bush, and Paulson have been very quiet about naming guilty or irresponsible parties, and it is unlikely that any will be brought to trial. Meanwhile, the taxpayer funds allocated under TARP can be used to rescue the irresponsible crooks in the inner circle.

There are no good guys in this crisis as it is the inflexion point where two corrupt political parties intersect. Both Bill Clinton and Barak Obama are controlled by Robert Rubin of Goldman Sachs. Bush is controlled by Paulson, who is also from Goldman Sachs. The money will flow to Goldman Sachs and a small circle of insiders. Certain interest groups will benefit from a temporary reinflation, until the cycle of deflation begins again as those who were given credit begin to default in large numbers. With so many people ignorant of the true history, we cannot count on the majority of voters to do anything besides beg for a handout from the next administration.

Financial moves alone cannot solve the fundamental problem of globalism, that free trade agreements relocate U.S. jobs overseas to the location of low-wage labor. Over 5 million U.S. jobs have been lost during the Bush administration. As long as governments support big multinational corporations with tax breaks and bailouts, U.S. small businesses will suffer and will fail to replace those lost jobs. Big business prospers at the expense of the taxpayer and the small businessman under free trade policies and government subsidies and tax breaks for big business and big agriculture. This is the policy of both political parties, and there is no end in sight to this crooked game.

Tags: free trade agreements, global credit crisis, Pelosi, TARP, TARP bailout

This entry was posted by Director on Wednesday, October 15th, 2008 at 4:45 am and is filed under TARP bailout. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.