Where did anyone ever in a million years get the idea that Obama knew anything about economics???

After Obama became president, he insisted on having "school" every morning which added another hour to the usual one-hour daily briefing that presidents have always received...he wanted to learn about economics and financial stuff. Hmmm...I think I'll stick to my belief that Hayek was correct.

...Was Keynes correct that savings become idle money and depress economic activity? Or was the Hayek view, first articulated by Adam Smith in the "Wealth of Nations" in 1776, correct? (Smith: "What is annually saved is as regularly consumed as what is annually spent, and nearly in the same time too.")

Is all spending equally productive, or should government policies aim to simulate private investment? If the latter, then Mr. Obama is following in FDR's footsteps and impeding recovery. He does so by demonizing business and creating regime uncertainty through new regulations and costly programs. In this he follows neither Hayek nor Keynes, since creating a lack of confidence is considered destructive by both.

Finally, is creating new public debt in a weakened economy the path to recovery? Or is "economy" (austerity in today's debate) and thrift the path to prosperity now, as it has usually been considered before?

Keynes vs. Hayek: The Great Debate Continues

More jobs were created by President Bush’s pro-business policies and tax cuts than by the Obama-Pelosi “spend your way to hell” Keynesian failure!

Now we know the truth...

Why Government Spending Does Not Stimulate Economic Growth: Answering the Critics

And how taxes affect economic growth...

Driving Down the Depression Road

by Dick McDonald
Ownership Society Institute

The Wall Street Journal article posted today, The Keynesians Were Wrong Again, confirms the painful reality that Barack Obama is trying to solve our severe recession with outdated and discredited fiscal policies that led to the severity of the Great Depression of the 1930’s.

More importantly the writer alerts us to the fact that until our government passes incentives for job-creating investment we will likely be headed for continued negative growth and possibly a depression.

When government takes money from taxpayers and borrows from their grandchildren to spend today to create temporary demand it always fails to create growth or jobs. Obama is making the same mistake FDR made to prolong the Great Depression. He is also tripling the mistakes Jimmy Carter made.

Our economy languished until Ronald Reagan passed the Kemp-Roth bill in the early 1980’s that was the incentive the economy needed to free capital to be used for job creating investment. Marginal income tax rates were dropped from 70% to 28% and that triggered the greatest 25-year period of prosperity any country has ever experienced.

Today America can experience an even greater and more dynamic period of prosperity if it can reverse the direction of the Obama Administration and pass incentives for job-creating investment. That would entail defeating the Obama Administration’s many spending proposals and passing a massive tax cut that freed capital for job-creating investment.

This time around cutting income taxes is not necessary. Fifty (50%) of the people don’t pay any and the rich pay only 15% on capital investments. Therefore the pool of capital that could be tapped is payroll taxes. The government taxes 15.3% of a worker’s lifetime income in return for no nest egg whatsoever. They deliver a paltry monthly retirement check one-twentieth (1/2oth) of what would have gotten if the taxpayer had been able to invest those taxes in the market during his working life.

Dumping over $100 billion a month of payroll taxes into the stock market would be the incentive the market needs to recapture the market losses in 401(k)s and create new jobs, prosperity and growth. It also would be the wealth creating policy that delivers the American Dream of financial to ordinary citizens. See here for how we can do this.

Defeating the current spending proposals will not solve our financial crisis. We still have find capital to invest in job-creating enterprises. The quickest and most accessible source is the pool of payroll taxes waiting to be employed.

How one economist singlehandly delivered America into enemy hands

Seventy years ago, on February 4, 1936, the English economist John Maynard Keynes (1883–1946) published what soon became his most famous work, The General Theory of Employment, Interest, and Money. Few books, in so short a time, have gained such wide influence and generated so destructive an impact on public policy. What Keynes succeeded in doing was to provide a rationale for what governments always like to do: spend money and pander to special interests.

In the process Keynes helped undermine what had been three of the essential institutional ingredients of a free-market economy: the gold standard, balanced gov­ernment budgets, and open competitive markets. In their place Keynes’s legacy has given us paper-money inflation, government deficit spending, and more politi­cal intervention throughout the market.

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