By Bruce Walker
America today stands on the precipice of a full blown
depression. International market forces are making the dollar
increasingly weak, and the response of our government is to produce artificial
demand by printing vast amounts of currency and credit. Is this America
in 1933 under Franklin Roosevelt? No, it is Weimar Germany under Wilhelm
Cuno. What Barack Obama is proposing is to take a nation facing enormous
debt and economic slowdown and to “cure” these problems by dramatically
increasing the money in our economy. This is the economics of Germany
before Hitler came to power.
America, during the Depression, did not face
inflation. The dollar was very solid. Prices fell. Our nation
actually experienced serious deflation. Although the methods of Franklin
Roosevelt and his Keynesian advisors was wrong-headed in many ways, at least it
was truly Keynesian. The British economist did not advocate governments
always running huge deficits and government always “priming the pump.”
What Keynes favored instead was in periods of recession in which private demand
was weak using government credit and purchasing power to stimulate demand
through inflation.
Our problem today is that we have utterly ignored any
serious economic model – Keynesian or otherwise – for many decades now.
We have not run surpluses to pay off public debt in good times, as Keynes
advocated, and inflation, which is an abnormal condition, has become so utterly
commonplace in our economy that COLA (cost of living adjustment) has become a
standard feature in government entitlement programs, union contracts, pension
agreements and the like.
Inflation or deflation ought to be a sign of serious
economic illness. When the measurement of monetary value continually
rises (or continually drops) then the agreement on value which money represents
has been cheated. What President Obama proposes in his $X Trillion
stimulus package is nothing less that the policies of Weimar Germany in the
early 1920s: government will simply print money to pay off debts and
raise the living standards of workers.
The problem, of course, is this sort of Ponzi Scheme never
works. Once the value of money becomes uncertain, once the amount of
currency and credit in circulation is determined by political pressure and not
economic reality, it collapses quickly. What if, for example, President
Obama persuaded Congress to give each American a “tax rebate” of $5,000 per
person? (Given the tunnel vision of the Left today, an ever
increasing river of money to Americans would be the only response to worsening
economic conditions.)
The value of money to Americans and of dollars to the rest
of the world would drop dramatically. Initially it would appear to the
average American that things were getting better: debts could be paid
off, purchases made, rent and house payments would be timely. But that
illusion of affluence would vanish quickly as the price of domestic goods (and
the endless torrent of cheap foreign goods) suddenly spiked in price without
any change in the real value of the goods.
Moreover, the economic behavior of business in America would
change. When the true value of money next year is anybody’s guess, then
businesses and people will – – in fact, they must – – get greedy. The
risk of any sort of investment (time, money, labor, brains) must be compensated
soon and big. Mature planning, the sort of planning that healthy families
and serious businesses engage in, yields to economic relations that are less
like enterprise and more like con games.
The very fact that Obama and his advisers are wondering “how
much” is needed to bring up out of economic distress is evidence of an
infection at the heart of government. If $1 Trillion is not enough (about
$3,300 per man, woman, and child in America) then what about $1.5 Trillion (the
$5,000 per person tax rebate I mentioned)? Why not $10,000 per person (or
$3 Trillion)? That would allow the vast majority of Americans in distress
to pay off delinquent mortgages and credit card debt and pay for a nice holiday
to boot. If $1 Trillion is good, why is $3 Trillion not better?
If the only arrow in our federal quiver is an avalanche of
federal “pump priming,” then is there any doubt about what the Obama
Administration will propose if (really, just when) the current torrent of bucks
fails to bring recovery? Except for Reagan, who understood the simple
principles of government taxation and government spending, our nation has used
Keynesian “pump priming” year in and year out, even when the pump did not need
to be primped. The consequence has been perpetual inflation, a condition
virtually unknown during the first century of our nation, when the cost of
living stayed static. Our nation now has a national debt which no one
really expects ever to be paid (rather like the indemnity payments which Weimar
Germany “paid” only by printing money.)
The consequence of true American economic collapse, like
Germany suffered, is almost incalculable to us and to the world. Over the
last century, even during the Great Depression, our dollar was strong, our
inevitable recovery understood, our ingenuity and productivity intuitively
grasped by the world. What Weimar Germany suffered, and what we may face
in America, is something different and worse than deflation and unemployment,
which could be ended by more government spending. Once dollars mean
almost nothing, the power of the federal government to cure problems by
spending money ends – – something Germans saw eighty-five years ago.
Government itself has lost all confidence of the people. When that
happens, people lose trust in almost everything. We do not have to guess
what sort of horrors can follow. After Weimar came a regime which
transcended the power of a democratic government. After Weimar came
Hitler.
© 2008
Bruce Walker — All Rights Reserved
Bruce Walker is the author of two books: Sinisterism:
Secular Religion of the Lie, and his recently published book,The
Swastika against the Cross: The Nazi War on Christianity.
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