Following the deductive genius of Austrian economics, many of us have been warning that Obama’s policies are plunging the country into a depression. The best book on the topic, of course, is America’s Great Depression By Murray N. Rothbard. Now, in a study endorsed by Nobel laureate James Buchanan, economists Charles Rowley of George Mason University and Nathanael Smith of the Locke Institute contend that Obama’s “policies even have the potential to consign the US to a similar fate as Argentina, which suffered a painful and humiliating slide from first to Third World status last century.”
According to the British Telegraph, “There are ‘troubling similarities’ between the US President’s actions since taking office and those which in the 1930s sent the US and much of the world spiralling into the worst economic collapse in recorded history, says the new pamphlet, published by the Institute of Economic Affairs.”
“… the White House’s plans to pour hundreds of billions of dollars of cash into the economy will undermine it in the long run. They say that by employing deficit spending and increased state intervention President Obama will ultimately hamper the long-term growth potential of the US economy and may risk delaying full economic recovery by several years.
“The study represents a challenge to the widely held view that Keynesian fiscal policies helped the US recover from the Depression which started in the early 1930s. The authors say: ‘[Franklin D Roosevelt’s] interventionist policies and draconian tax increases delayed full economic recovery by several years by exacerbating a climate of pessimistic expectations that drove down private capital formation and household consumption to unprecedented lows.'”
The researchers err in their support for “the Federal Reserve’s moves to slash interest rates to just above zero and embark on quantitative easing, pumping cash directly into the system.” That goes against the grain of what the authors have contended.
Truly scary, but nothing that Austrians have not been bracing for, is the warning “that greater intervention could set the US back further. It is also not impossible that the US will experience the kind of economic collapse from first to Third World status experienced by Argentina under the national-socialist governance of Juan Peron.”
“The paper … recommends that the US return to a more laissez-faire economic system rather than intervening further in activity.” Dah!
Said James Buchanan: “We have learned some things from comparable experiences of the 1930s’ Great Depression, perhaps enough to reduce the severity of the current contraction. But we have made no progress toward putting limits on political leaders, who act out their natural proclivities without any basic understanding of what makes capitalism work.”
Read “Voodoo Child Talks Up A Storm,” and “The Commie Who Controls the Economy From the Grave.”