Tuesday, March 20, 2012

Verbatim: "We have not learned a thing"

January 2013: here we go!
From Bruce Krasting, one of the best daily reads on the internet (use the permanent link below at right):  "I think we are about to re-make many of the mistakes of 1936/37. The programmed spending cutbacks, couple with the many impending tax increases on 1/1/2013, will certainly cause a sharp contraction in economic activity. Bernanke’s Fed has sworn that it won’t make the mistakes of 1936/37. But I've shown (and the Fed’s own research confirms) that Fed policy was not the cause of the '37 crash. Bernanke is relying on a false interpretation of history to justify his monetary policy today. We will face an economic slowdown due to lower federal spending, and at the same time, inflation will be rising as a result of the excessively loose monetary policy. Stagflation is in our future. Should this be the result, the historians will say that both the Fed and fiscal policy are to blame. In other words, we have not learned a thing from our past mistakes."  My thoughts?  Canada, of course, exports 70% of its goods to our southern neighbour, including 60% of their energy requirements (last time I looked).  What will be the resultant effect on Canada of a deep American "stagflation"?  Another thought: Ron Paul is the only Republican nominee that "gets it".  And a final one: It wasn't ideology that brought the old USSR to its knees, it was crushing debt.