Page 1 of 2 The rise of Obama's communism
By Noureddine Krichene
President Barack Obama has been far to the left among US presidents, perhaps the farthest. Although he inherited one of the wildest and financially anarchic economies caused by George W Bush's militarism and financial disorder, President Obama, a devoted leftist, has only made the situation worse.
Recklessly, he has kept ratcheting up US debt since 2009. Seeing the vanity of debt ceilings, the left-dominated Congress decided to lift any constraint on government debt so Obama can raise it to the skies. Likewise, the US Federal Reserve has been pushing private debt to the skies. Debt, then more debt to
extinguish existing debt - and build prosperity.
The only lesson learned from the 2008 financial crisis is that no limit should exist for debt; the more debt is in default, the more debt should be issued. The Fed knows no Basle III rules or any regulation that should prevent disorderly growth of debt. This is in line with one of the oldest banking principles: debt is meant to be defaulted; debt brings prosperity, then there should be no restriction on it.
In the distant past, banks used to disappear following bankruptcies. Now, the Fed prints trillions of dollars to bail out bankrupt institutions. Hence, as long as there is no constraint on paper, there should be no constraint on debt.
The mountainous debt added by Obama is a pure waste; it is not essential for running the government and has no impact on economic and social capital. It is called a stimulus debt, to be showered on Obama's voters, welfare recipients, unemployed workers, and so forth. Obama believes that stimulus debt brings high growth and full-employment. In like manner, the Fed has pushed fantastic new subprime debt at near-zero interest rate. As before the 2008 crisis, this new subprime debt will be a pure loss. The Fed has only contributed to fire up the price of housing, of stocks, and of basic necessities.
Obama and his communist entourage such as former Federal Reserve chairman Ben Bernanke, his recently installed successor Janet Yellen and many other statists, believe that government bureaucrats, through unlimited money printing and fiscal spending, will re-establish full-employment and high prosperity.
It is impossible to convince doctrinaires attached to Marxism and Keynesianism to change policy course. Stalin, Mao, and other communist leaders never renounced socialist ideals, despite the calamities caused by their doctrines.
Needless to say that Bangladesh, Burundi or Mauritania cannot afford to undertake Obama-Bernanke-Yellen fetish communism and become rich on paper money printing. Since no one will accept their paper currencies, these countries cannot undertake Obama's profligacy. They wish they could. In the case of the US, Obama and his communist entourage can indulge in their Marxism and Keynesian caprices as long as the dollar continues to be accepted. The poor in vulnerable countries pays the price of Obama's stimulus as it de-stimulates and starves the poor in Bangladesh and elsewhere.
Obama's policies are as fallacious as the Keynesian principles on which they are based. Keynes asserted that his theory turns stones into bread. This magic did not exist during the 19th century. In fact, financial crises were too frequent both in the US and the United Kingdom. In both countries, it became admitted that the banking sector was inherently unstable and that there was no point for the government to keep dancing to the rhythm of banking crises. Governments decided that imprudent and corrupt bankers had to disappear and rejected any interference with prices and wages.
There was no Greenspan-Bernanke style re-inflation. The Bank of England had no policy indicator except its reserves in gold. It did not care about prices or employment. If its gold reserves were low, it raised its discount rate; if they became too high, it relaxed its discount rate. Under a gold standard, no country could boast of Obama-Bernanke-Yellen madness. Under such a standard, the US would lose all its gold, and would renounce its utopia. Under a dollar standard, it can go on into its utopia and tax Bangladesh and other countries as far as it wishes.
During the 19th century and before, unemployment was the concern of no government, since by definition, mass unemployment never existed in any country. Employment is a biological necessity. People have to cultivate land, build manufacture, and generate livelihood. No bird can remain in its nest and wait for food; it has to fly and seek food. Likewise, men build civilization, science, and technologies to create livelihood.
Unemployment is a pure luxury phenomenon. Mass-unemployment is a pure government creation and never exists in any free society.