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.

According to the DailyKos reporting a Fox News poll, Obama’s “economics” is more popular than Reagan’s economics. I never lived through the era of Reagan so I don’t know what it was like under the execution of his economics.

I do know that the four principles stated in Wikipedia about Reaganomics are economically sound:

1. reduce the growth of government spending,
2. reduce marginal tax rates on income from labor and capital,
3. reduce government regulation of the economy,
4. control the money supply to reduce inflation.

You always want to reduce government spending so that more productive uses of money can take place in the private sector. Taxes are always a disincentive to work and be productive so they should always be lowered. The best case scenario is we abolish all taxes on income.

Regulation is all the rage these days from the left and the right. The reason why we are in this economic mess was due to regulation so more of it is not going to help. Regulation is any intervention into the market and the government has been intervening for decades. (Read Meltdown for a comprehensive look.)

We should never let the government run the printing presses and dilute the value of existing dollars. Deflation is a good and inflation is an evil–everyone benefits from lowered prices. Idealy, the market would take care of what medium is used as money.

While Reaganomics looks good on paper, Obamanomics is bad on paper and in execution. The comparison of Obama to FDR was already a bad sign. Few Presidents has done more to harm the economic well-being of Americans than FDR. He took a recession upon entering office after criticizing Hoover’s absurd government spending and made things many magnitudes worse by injecting Hoover’s policies with steroids.

Obama is taking Bush’s economics and injecting it with steroids. Bush’s economics was poor and has largely extended length of the recession. Obama’s economic actions since taking office will make things even worse. You cannot solve a problem caused by excessive spending and credit with more spending and credit. To think that America is going to become prosperous once again by going into even greater debt is exceptionally poor financial advice.

It is unnerving to see a poll suggesting Americans believe we need more socialism over free markets. However, I hope that this is just a wanting to believe that Obama can solve the nation’s economic crisis than a real indication of people’s perceptions. Everyone wants to be out of this crisis and back to the good life.

Free markets made this nation the economic engine of the world. Centrally planned systems have driven nations into destruction through all of history.

I did not see Obama’s address to Congress on TV but, I did catch some of it on YouTube. I read about most of the address from news articles. As was expected, this address was about the economic crisis and how the recent stimulus bill would fix things. If you’ve ready anything I’ve written about the bill, you’ll know that it will not work–Obama is just blowing smoke.

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.

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Economics is going to take center stage for the Obama administration this week. Obama is having a Financial Stability Summit with a variety of people including cabinet members, economic aides, and Congressional leaders. He will then speak to Congress on Tuesday at 9PM about the economy.

On Thursday, Obama will unveil his budget and plan of action to “fix” the economy. The markets fell off a cliff last week and is still sinking today. The markets may or may not rally after Obama unveils how he will manipulate the economy and cause capital to move into areas that the market feels it should not.

Obama also pledged to cut the budget deficit in half by 2013. I suppose if you increase the deficit enough, cutting it in half would be less difficult. $500 billion deficit looks better than $1 trillion but, it is still pretty astronomical.

Chances are all the spending will do nothing to fix the economy and surely make things worse. It hasn’t worked in the past. Even the crazy Keynesians like Paul Krugman agree it hasn’t worked in the past. They just think there wasn’t enough spending–how laughable.

We’ve been blessed with the recent deflation during this economic crisis. Prices have collapsed so that less strain would be placed on our wallets as jobs start to disappear. The government has been printing money like it is going out of style to prop up prices and bailout incompetent companies.

AP reported that wholesale inflation made the biggest jump in six months. The economists being cited in that article all expected less inflation than what actually happened. When are they ever accurate? They couldn’t see the financial crisis and said everything would be rosy. These mainstream economists are about as good as the weathermen.

These same economists also say, “despite the big jump in wholesale prices in January, economists do not believe inflation is on the verge of becoming a problem, given the country’s deep recession.”

I don’t see why anyone should believe them. They’ve been wrong and are still wrong.

With the low interest rates instituted by the Federal Reserve and the amount of reserves the banks are holding, inflation is not going to be kept in check. It might not explode in the short term but, inflation is coming. You cannot print money like a mad man and expect inflation to stay at bay.