Govt Spending Now vs FDR

I am not a fan of FDR, however, his programs were lot smarter than of Bush and of the current govt and Congress and Senate.  Yes, it was govt programs, but at least they produced something and kept men employed.  Current programs, do not produce any thing and kept men unemployed.  It is an ugly shame; and just plain stupid.  

Bail outs for the banks and Wall Street.  Nothing for the people. 

Govt is to be of the people for the people.   But money rules and the people are fooled. 


From Stock Tiger: 

In March 1933 president Franklin D Roosevelt issued an executive order establishing the Civilian Conservation Corps CCC. This was an incredibly smart and useful thing to do at the time and one that would reap rewards over all the years that have followed. The program was planned to employ 250,000 young men from 18 to 20 years old to work in the areas of soil erosion, flood control and other manual labor that could in the long run greatly benefit the country and in the short run help to relieve some of the unemployment problem. They were given housing, food and medical attention and were paid $30 per month with a mandatory $22-$25 of that sent to their family. By July of that year there were already over 1400 working camps with 250,000 workers. Because of favorable public opinion of this program, by 1935 the program was expanded to the age of 28 and over 500,000 enrollees were employed in about 2900 camps with 82% of Americans in favor of this program. Over the years this program was expanded to include a mandatory minimum of 10 hours a week of vocational and academic training to prepare workers for work once they left the program. Generally, workers signed up for a minimum of six months work with the possibility of staying for up to two years. The official program ended in 1942 but this became like a model which is still used today in various conservation programs throughout the country. During the time of this program the workers planted about 3 billion trees to help reforest America and they constructed more than 800 parks nationwide with thousands of miles of public roadways. America now has some incredibly beautiful national and state parks with thousands of miles of well constructed trails produced during this period. Though this program ended over 60 years ago the benefits continue. There are over 30 million RV enthusiasts supporting a myriad of businesses basically made possible by the work done in these programs.


Since the current economic crisis began the Fed has spent over $3 trillion in loans, bailouts and stimulus programs. The Fed is run by the banks so it is logical that they used this money for their own members' benefit instead of doing something that would directly help the country's citizens but congress has allowed this. In 1933 the country had a much smaller population and the economy was such that the $30 per month payment was agreed upon. If the government established a temporary worker program today perhaps they would have to pay $3000 per month but this money instead of going to banks, for them to use investing in the stock market, would go directly to the people and then into the the general economy benefiting everybody, including the banks. Goldman Sachs who received TARP money makes up to $100 million a day in stock trading profits benefiting no average American and certainly not benefiting the millions of unemployed and over 40 million living in poverty. It is difficult to get a reliable figure as to how many people are unemployed at the moment. There will always be a small percentage that are unemployed by choice, maybe temporarily or maybe due to health reasons. If the government were to now establish a work program for temporary relief of course not nearly all people could qualify for various work due to skill set sets and other reasons. For illustration purposes let's use the 14 million figure which is about how many are currently unemployed. To pay each of them $3000 per month would cost $504 billion per year or about $96 billion less than the Fed is proposing to spend only through June in buying government treasuries. If they used this money in a productive way, as seen here, you would have immediate results, at least temporarily. This money instead of being hoarded by banks would go directly into the economy and over time spark many new businesses which would then be in competition with the government for workers. It is a shame and so typical that the government does the opposite of what it should do when faced with a problem.

The US imports oil while natural gas sits unused as they say there is not a good piping distribution system to deliver it where needed. Perfect - a work program to create a nationwide delivery system and say goodbye to imported oil. President Kennedy launched an industry to put a man on the moon in 10 years creating hundreds of companies and thousands of jobs and some of that was really rocket science. Laying some pipes around with the help of some of the 14 million unemployed is not but the administration and congress instead extended payments to unemployed people with no work requirement so the country sees no lasting benefit.

Through all this the stock market though is up......which IMMHO does not make sense....but it will in time and then everyone will be surprised. 

Economist - What went wrong with Economics

From the Daily Reckoning

In the meantime, The Economist magazine, that august font of accepted wisdom, tells us "what went wrong with economics."

Nobel Prize winner Paul Krugman remarked that the learning of the past 30 years in macroeconomics was "spectacularly useless at best, and positively harmful at worst."

The Economist responds: 'What went wrong with economics?' it asks. Not much, it concludes.

Except that its most precious theories are claptrap. And its most prominent experts are nincompoops. And it helped cause the biggest economic crisis in perhaps half a century...failed to see it coming...failed to understand it...and then made it worse by offering to fix it.

Apart from that...macroeconomics is fine.

Economic Policy Conundrum

The world's economy is facing years of ill-begotten economic policies. The worst economic downturn in 80 years is the result of these policies. Healthy economic growth is savings based and thus is sustainable. However, the economic growth that has occurred was not based on savings and production, but was credit and policy induced. It was and is artificial and thus unsustainable.

The policies that were implemented included:

• Monetary policies - these kept interest rates low (artificially) for years
• Tax policies - favour debt financing over equity
• Regulatory policy - that allowed financial institutions to mismanage their operations eg excessive leverage
• Social policy - which pushed home ownership regardless of affordability
  

All of this combined created credit induced artificial demand. More and more debt was created.

The current world's view is that the solution lies in re-inflating the assets values. The proposal is to create more debt and more demand to lift the asset values. But this was the cause of the problem! Debt-financed demand can't not be sustained indefinitely and that is why the policy is doomed to fail in the long-term.

Economic demand has to be savings driven to be sustainable.

What now the governments has recently announced that in addition to debt driven demand, that they are now will use the nuclear option....of printing money which is a debasement of the currency. That will push up asset values in nominal terms but not real; as well as pushing up costs. Inflationary environments....everyone losses.

What is needed? It is an economic Marshall Plan for the world markets and economies. It requires work, it requires sacrifice, it requires lower expectations.

I think the people want change, and are willing to go with lower growth based on real economic principles and values.

However, what is required is need real leadership, leadership on savings and reducing costs. The US Congress needs to be an example and they are failing the world. Instead they are delivering empty promises, rhetoric and phony legislation. Appalling and disappointing.

Push for financial literacy spreads to schools

I agree.....we need to teach financial literacy; and just not budeting, spending, saving, and investing but economics. I think we have long way to go.....but it is starting!

Roy Kobert set aside his work as a bankruptcy attorney one Friday morning to teach these and other personal-finance lessons at Boone High School. He starts by showing the 11 students of this senior-level business class a Saturday Night Live sketch in which Chris Parnell touts a book called, "Don't Buy Stuff You Can't Afford."

Where are we going?

What is the economic model that we are turning to?

Expanded government control of private assets, production dictated to achieve political objectives, operations dictated by non-shareholders, conditions designed to produce failure and increased reliance upon public funding...

What is it?

It is an economic model in which the state dictates the utilization of privately held assets to achieve public policy goals.

That is the way we are heading.