Obama's Stimulus Scam

Meltdown

By Thomas E Woods Jr

Most of us have probably heard just about all the arguments we can take in favor of the so-called stimulus package Barack Obama urges upon us.  They boil down to this: if the government seizes resources from individuals (whether by direct taxation, borrowing, or inflation) and devotes them to arbitrary projects, we will prosper.

Japan has been through countless "stimulus" packages over the past 18 years, none of which has accomplished a thing apart from driving that country deeply into debt.  And after years and years of government attempts to give artificial stimulus to the stock market and the real estate sector, the Japanese stock market is now about where it was in the mid-1980s, and real estate is selling, on average, for the same prices it was in 1975.

The same is true of the American economy of the 1930s, the decade in which President Franklin D. Roosevelt was supposedly lifting the country out of the Great Depression.  Far from restoring prosperity, Roosevelt did everything he could to interfere with the economy's adjustment from depression to health.  Thus instead of letting prices and wages move freely so the economy could reallocate resources rationally, he kept wages artificially high (and workers artificially unemployable) and propped up consumer prices.

More pertinent to our situation, FDR's make-work programs dwarfed even Herbert Hoover's public-works spending, which had allocated more funds for that purpose in four years than had been spent in the previous 20.  Billions of dollars later, what FDR had succeeded in doing was to divert resources from a private sector starved for capital, and thereby weaken the forces of recovery.  When genuine wealth generators have to compete with government for labor and resources, the productive sector is weakened at the hands of the parasitic sector.

>From 1933 to 1940, the unemployment rate averaged 18 percent.  As the 1930s ended, FDR's Treasury secretary, Henry Morgenthau, wrote in his diary: "We have tried spending money.  We are spending more than we have ever spent before and it does not work.... We have never made good on our promises.... I say after eight years of this Administration we have just as much unemployment as when we started...and an enormous debt to boot!"

What a perfect summary of the stimulus scam: it doesn't deliver what it promises, and it saddles the people with more debt.  You'd think we would have learned this simple lesson, but instead our children have been taught that FDR -- as big an economic ignoramus as has ever occupied the White House -- was a genius who saved the American economy.  The economic and historical research debunking this view is all over the professional journals, but the New York Times professes to be horrified to learn that dissent exists over the legacy of FDR.

It is impossible to devise a plan for economic recovery without knowing what caused the downturn in the first place.  FDR didn't have the slightest idea.

As the great free-market economists Ludwig von Mises and F.A. Hayek (who won the Nobel Prize in 1974) showed, when a government-established central bank, such as the Federal Reserve, forces interest rates below the level at which the free market would have set them, it sets off an unsustainable investment boom, particularly in time-consuming projects far removed from finished consumer goods (mining, construction, etc.).

Now if interest rates had come down because the public was saving more, then the public's saved resources would have provided the material wherewithal to see all the new investment through to completion.  But if interest rates come down because the central bank forces them down artificially, as in the case we're examining here, then the investment boom cannot persist because insufficient resources have been saved to fund them.  The passage of time will reveal that they cannot all be completed.  Many of these investments turn out to be malinvestments -- that is, investments that should never have been undertaken in the first place, but that investors were misled by artificially low interest rates into thinking were profitable.  They have to be abandoned.  The bust comes.

In other words, it isn't the "free market" that causes the boom-bust cycle.  It's the central bank's interference with the free market.

It's essential that government not interfere in the economy during the bust.  Malinvestments need to be liquidated, not propped up with emergency loans.  The economy's structure of production needs to be reorganized, with resources moving out of firms and sectors that were artificially and uneconomically expanded during the boom, and into genuinely profitable lines of production that cater to real consumer wants.  Prices and wages need to be flexible in order to effect this rearrangement.

FDR interfered in this healthy process every step of the way.  Not surprisingly, recovery eluded him.  (And as I show in Meltdown, my new book, even the common claim that "World War II got us out of the Depression" is false and yields unnecessary ground to the stimulus-mongers.)

That's why the depression of 1920, whose first year was worse than that of the 1929 depression, was so short lived.  Instead of a "stimulus" package, the federal government cut its budget.  The Federal Reserve didn't try to inflate the boom back into existence.  The economy sorted out the sound investments from the malinvestments, and before long the United States was back to setting production records once again.

Where is Warren G. Harding when you need him?

Thomas E. Woods, Jr., is the New York Times bestselling author of nine books, including The Politically Incorrect Guide to American History and, most recently, Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse.  Read a free chapter at MeltdownTheBook.com and visit Tom at ThomasEWoods.com.

Acclaimed environmentalist and author of "Apocalypse Never" Michael Shellenberger joined Glenn Beck on the radio program Wednesday to warn us about the true goals and effects of climate alarmism: It's become a "secular religion" that lowers standards of living in developed countries, holds developing countries back, and has environmental progress "exactly wrong."

Michael is a Time "Hero of the Environment," Green Book Award winner, and the founder and president of Environmental Progress. He has been called a "environmental guru," "climate guru," "North America's leading public intellectual on clean energy," and "high priest" of the environmental humanist movement for his writings and TED talks, which have been viewed more than 5 million times. But when Michael penned a stunning article in Forbes saying, "On Behalf of Environmentalists, I Apologize for the Climate Scare", the article was pulled just a few hours later. (Read more here.)

On the show, Micheal talked about how environmental alarmism has overtaken scientific fact, leading to a number of unfortunate consequences. He said one of the problems is that rich nations are blocking poor nations from being able to industrialize. Instead, they are seeking to make poverty sustainable, rather than to make poverty history.

"As a cultural anthropologist, I've been traveling to poorer countries and interviewing small farmers for over 30 years. And, obviously there are a lot of causes why countries are poor, but there's no reason we should be helping them to stay poor," Michael said. "A few years ago, there was a movement to make poverty history ... [but] it got taken over by the climate alarmist movement, which has been focused on depriving poor countries, not just of fossil fuels they need to develop, but also the large hydroelectric dams."

He offered the example of the Congo, one of the poorest countries in the world. The Congo has been denied the resources needed to build large hydroelectric dams, which are absolutely essential to pull people out of poverty. And one of the main groups preventing poor countries from the gaining financing they need to to build dams is based in Berkeley, California — a city that gets its electricity from hydroelectric dams.

"It's just unconscionable ... there are major groups, including the Sierra Club, that support efforts to deprive poor countries of energy. And, honestly, they've taken over the World Bank [which] used to fund the basics of development: roads, electricity, sewage systems, flood control, dams," Micheal said.

"Environmentalism, apocalyptic environmentalism in particular, has become the dominant religion of supposedly secular people in the West. So, you know, it's people at the United Nations. It's people that are in very powerful positions who are trying to impose 'nature's order' on societies," he continued. "And, of course, the problem is that nobody can figure out what nature is, and what it's not. That's not a particular good basis for organizing your economy."

Watch the video below to catch more of the conversation:

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Dr. Voddie Baucham, Dean of Theology at African Christian University in Lusaka, Zambia, joined Glenn Beck on the radio program to explain why he agrees with Vice President Mike Pence's refusal to say the phrase "Black Lives Matter."

Baucham, who recently drew national attention when his sermon titled "Ethnic Gnosticism" resurfaced online, said the phrase has been trademarked by a dangerous, violent, Marxist movement that doesn't care about black lives except to use them as political pawns.

"We have to separate this movement from the issues," Baucham warned. "I know that [Black Lives Matter] is a phrase that is part of an organization. It is a trademark phrase. And it's a phrase designed to use black people.

"That phrase dehumanizes black people, because it makes them pawns in a game that has nothing whatsoever to do with black people and their dignity. And has everything to do with a divisive agenda that is bigger than black people. That's why I'm not going to use that phrase, because I love black people. I love being black."

Baucham warned that Black Lives Matter -- a radical Marxist movement -- is using black people and communities to push a dangerous and divisive narrative. He encouraged Americans to educate themselves on the organization's agenda and belief statement.

"This movement is dangerous. This movement is vicious. And this movement uses black people," he emphasized. "And so if I'm really concerned about issues in the black community -- and I am -- then I have to refuse, and I have to repudiate that organization. Because they stand against that for which I am advocating."

Watch the video below to catch more of the conversation:

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We're going to be doing an amazing broadcast on Thursday, July 2nd, and we will be broadcasting a really important moment. It is restoring truth. It is restoring our history. It is asking to you make a covenant with God. The covenant that was made by the Pilgrims. And it's giving you a road map of things that we can do, to be able to come back home, together.

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On last week's Wednesday night special, Glenn Beck revealed where the Black Lives Matter organization really gets its funding, and the dark money trail leading to a cast of familiar characters. Shortly after the program aired, one of BLM's fiscal sponsors, Thousand Currents, took down its board of directors page, which featured one of these shady characters:

Ex-Marxist professor and author of "Beyond Woke," Michael Rectenwald, joined Glenn Beck on the TV show to fill us in on the suspicious change he discovered on the Thousand Currents webpage and the Communist terrorists who is now helping run the organization. (Fortunately, the internet is forever, so it is still possible to view the board of directors page by looking at a web archive from the WayBack Machine.)

Rectenwald revealed the shocking life history of Thousand Currents' vice chair of the board, Susan Rosenberg, who spent 16 years in federal prison for her part in a series of increasingly violent acts of terrorism, including bombing the U.S. Capitol building, bombing an FBI building, and targeting police for assassination.

"Their whole campaign was one of unbelievably vicious, murderous cop killings, assassinations, and bombings," explained Rectenwald of Rosenberg's terror group known as the May 19th Communist Organization or M19.

Watch the video below to catch more of the conversation:


Glenn's full investigation into the dark origins of the funding behind Black Lives Matter is available for BlazeTV subscribers. Not a subscriber? Use promo code GLENN to get $10 off your BlazeTV subscription or start your 30-day free trial today.

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