Argentina and United States (OMG) - Parallels
by Larry Perrault on March 28, 2010 at 10:33 AM
Argentina is one of history’s parallels to the course America is on. You should understand some things in light of the murkiness of the messages that are floating about. I needn’t be so rude as to start naming names, but there are financial advisors who are advising the usual safety of US treasury bonds. They may be serious in their habitual confidence. But also bear in mind the habitual short-term perspective. And short term, they may be right: the dollar might rise in coming months or even years. But, don’t sink your money into long-term government bonds, now. And given what government and The Fed have been doing, I don’t mean 10 or 20-year maturity. Today, I’d call 5 years a high-risk gamble.
And political commentators have mused about Obama’s political fortunes if his plans do or do not “work.” I can’t think of a comprehensible definition of “work” in which such a question makes sense. This is not even a wager like one made at a Casino, long though, those odds generally are. But in fact, there is a true amount of action in any such gamble that would produce a win, if one could calculate the pressure of the slot machine arm, the angle, projection ant tumble of the dice or the shuffle, deal and play of the cards, which of course one can’t. But, if you were God or maybe Superman, you could ascertain the value of those factors and predict the outcome.
But, the forces of coerced appropriation of a massive over-printing of currency amount to a question more on the order of whether if I knock over a glass of water, will the contents spill out? If “working” means that the water stays in the glass, then working is not a calculation of odds or good-fortune or wise action. Working in this case would be properly described as “a miracle.” So why thus far, after the huge stimulus and omnibus budget, and the unprecedented printing of unsubstantiated American currency, have rapid price increases not yet struck with a vengeance? Because that liquidity allocated by The Fed is not yet in general circulation. It was mainly allocated to large financial institutions that have horded part while investing part in relatively low risk and safe efforts, including those efforts secured by the government itself.
So, the government is propping up modest gains for the large financial institutions that The Fed has subsidized. On the street, we see that the stock market posts modest gains that can be counted as “growth,” while for most Americans dollars are stagnant and unemployment is still near 10%. This should continue in the coming months as growth of this sort is the only good news that office-holders will have to talk about. Of course, Obama has and will continue to talk about a recovering economy. You will hear more about the steady “growth” following the administration’s “pulling us back from the brink of…whatever.” This is the promulgation of a nightmare scenario from which the public “has been saved.”
Yes, pumping liquidity into large financial institutions (never mind the control and equity that government leveraged in these private businesses), saved some from failure from mostly the effects of government interference and high-risk behavior, keeping them trudging along. And, that prevented huge layoffs and entity closures. But what then? The implication of the story is that all of these people would have sat home in their pajamas in a state of despair and paralysis. That implication is…dumb. Particularly if the government had kept its burdensome taxation and regulation and its sticky controlling fingers out of the mix, these people would have launched new ventures and these people would have found new occupations.
Obama says, “We saved America from “another Great Depression.” But, The Great Depression was great and lasted a dozen years precisely because the Roosevelt administration imposed a similar manner of intervention and manipulation as has Obama. No, I’m not letting the Bush administration and TARP off the hook. Bush/Paulson made the sort of move that Western dogma has taught us to make ever since Roosevelt. Obama has only made their large and foolish efforts look comparatively small.
There is no reason to suppose that employment and new innovation and growth will occur before a new majority is elected and the laborious process of extracting the government teeth from the national backside is undertaken. It is the American people who must do this and insist that what was crammed down America’s throat is crammed back on Obama. Let him veto that in the face of an unprecedented electoral reversal and mandate. If he does, let him try to govern after that and dare him to run for reelection. This must be done and hopefully before we are crushed with the consequence of what has already been done.