Tom is entertaining and informative in this 50 minute speech. You need to watch this!

Few people can explain sound economics as well as Peter Schiff. He explains why the stimulus is garbage and that the result of all this government spending is going to result in an inflationary depression.

Ron Paul laid the smackdown on Baldwin. The argument for drug laws have never been good and Baldwin hasn’t improved upon it. It ends with Baldwin running out of intelligent things to say and taking a jab at Paul supporters.

For the record, I support Paul and I don’t smoke pot. I am also not against those who do smoke it. People are free to make their own life choices.

Sadly, I have not actually read these two works by Hayek–I really should. It is nice to see that Lampert is suggesting stockholders to read about the Austrian viewpoint of the situation we are in. It is good to see that not every head of big corporations are capitalists in good times and socialists in bad times.

“As a country, we need to rebuild confidence and trust and to understand what happened. Whether by business or by government, the misdiagnosis of situations leads to poor prescriptions for rehabilitation and recovery. When the misdiagnosis is done at the federal government level and involves large parts of a national economy, the consequences can be swift and significant.”

We absolutely need to understand what happened. The mainstream media has misdiagnosed the problem and is applying the wrong treatment. The swift and significant consequences of a poor prescription will be a long and extended depression.

Bernanke said at one point that the Fed cannot create capital and that lending should come from private hands and thats why we need the stimulus. The problem with that view is that the stimulus is just creating money and giving it to “private” banks. No capital was created.

I really wanted to hear what Bernanke would have said about Paul’s last question regarding World War II.

I wasn’t sure that I was going to blog about this at almost 3AM on the East coast but, then I heard this statement from his address:

“Tonight I want every American to know this: We will rebuild, we will recover, and the United States of America will emerge stronger than before.”

Of course he did not go on to explain how this will happen. He just says it will. As if he can command the forces of economics to do his bidding if he just signs it into law. Let’s not be ridiculous. You can no more change the laws of economics as you can change the law of gravity.

“Because we cannot consign our nation to an open-ended recession,” Obama had urged Congress to do whatever proves necessary. What does that even mean? Completely vague and useless as is most of Obama’s fantasticly spoken speeches. It all sounds great, it just doesn’t mean anything.

The recession was never “open-ended”. It would end as soon as the bad debt was liquidated from the system. A lot of pain and suffering would have occured but, the recession would not turn into a depression. The almost $800 billion stimulus bill will make a recession that would have lasted a couple of years in the worse case scenario to something that is now open-ended.

No one knows how long this will last. You cannot solve the problem of too much credit and spending with more credit and spending. The idea that you need to fill the “gap” left behind by a decrease in consumer spending with government spending is idiotic.

Firstly, the government does not have any money. How can you spend if you don’t have money?! They have to take it from the citizens in taxes. It doesn’t matter if you inflate the money supply, tax directly, or borrow and then tax later. The fact of the matter is, the citizens will be taxed. Borrowing money has the unseen consequence of removing capital from the market for entreprenuers to use to create real productive jobs.

The government cannot create real productive jobs. There is no mechanism to tell the government whether it is doing a good job or not. The market has what is known as profits. Companies that make profits are satisfying the consumer. The government can run a business in the red forever–it’ll just make the budget for that department bigger.

Obama did some bashing of the Bush administration–and they deserved it–by saying that “we have lived through an era where too often, short-term gains were prized over long-term prosperity, where we failed to look beyond the next payment, the next quarter or the next election.” The irony is that all his economic policy decisions since entering the Oval Office has been short-sighted.

This is a president who has been in office for little over a month and has already spent into the trillions. I don’t call that long-term thinking. That is some of the shortest term thinking I can imagine. He wants to duct tape a broken economy together with freshly printed dollar bills. The affects and unseen consequences of all this spending are going to catastrophic.

Not only will the United States not emerge from this crisis “stronger”, we will be poorer for years to come.

Obama says that his American Recovery and Reinvestment Act will “build a new foundation for lasting prosperity”. In reality, he is actually hoping Elmers Glue can hold the current economic foundation riddled with termites together. There is no new foundation being built. The market is trying to create a new foundation and the government is trying to stop it. You need to clear the bad investments and let those who made bad decisions take losses.

Only then can we have a new foundation for lasting and real prosperity.

The most you can say about Obama’s address was that he was charasmatic and hopeful. He is very good at that–portraying hope. Unfortunately, being able to make everyone feel good doesn’t solve the actual problem. Everyone is going to feel a lot worse in a year when the stimulus bill has worked its way into the system and worsened the problem.