Doctors Pelosi et Obama Promise to Cure

A new government-financed bubble will soon be upon us and, like a runaway train, it cannot be stopped. _TheAge

It is one of history's great jokes that the US, with its traditions of "limited government", should be now be led by unlimited government proponents such as Obama and Pelosi, just when a century-long string of government excesses should come to a bubble-bursting climax.

Far from restoring the economy to health, the pork-barrel Pelosi plan will likely force the US economy into the catastrophe of acute stagflation and decline, with grave long-term repercussions at home and abroad.

....With the stakes this high, Pelosi should have restrained her urge to flex political muscle.

Most economists agree that America has enjoyed unprecedented prosperity, based primarily on excessive US dollar liquidity and unmanageable levels of debt. Thus, any healthy correction would necessarily involve serious deleveraging and a severe recession. After a lot of pain, the economy would rebuild with healthier fundamentals. Infrastructure improvement would aid, but not cause, the eventual recovery.

Recession is the natural cure for the politically inspired profligacy that America has enjoyed for almost 40 years. Unfortunately, the side effects of this medicine, namely the rapid reallocation of labor resources and deflationary damage to debtors, are still unpalatable to pandering politicians.
_Browne

Obama's apocalyptic threats -- of the irreversible devastation that would occur should he not get his way -- do not suggest leadership in the grand tradition of Churchill during the blitz. Instead, the push toward unlimited government powers and ever-building, unlimited government spending suggest more the Bernie Madoff scam artist of pyramid scheme fame.

This week President Obama claimed that failure to pass his economic stimulus bill will have catastrophic consequences for the U.S economy. The reality is the catastrophe will be far greater with his plan than without it. If the trends of January and early February of 2009 continue, the rug will be completely pulled out from beneath the U.S. economy, and the full cost of the President's "economic depressant package" will be apparent to all. _SeekingAlpha

It is difficult to believe that Pelosi et Obama actually understand the potential for economic devastation that lies within the current international financial stress point. Their actions suggest that they are viewing the crisis as an opportunity to consolidate power by rewarding powerful friends and by undermining the private sector of the economy -- which is viewed with mistrust and loathing by the unlimited government faction currently in control.

Obama and Pelosi do not understand the current problem. No wonder their "solution" is so perfectly crafted to make the problem considerably worse.

I fear that the trillions of government finance spent to save the world from "deflation" will, in the end, require perpetual needs for trillions more. There will be no kick-starting asset bubbles or a return of private-sector credit excess. Instead, it will be a case of throwing repeated doses of government-directed finance/purchasing power at the system. Temporary but fleeting economic boosts will then require only stronger doses of artificial stimulus.

We've commenced a new cycle dominated by government electronic printing presses in all their various forms. The inflationary consequences will be a different variety than we've grown accustomed to from previous reflations. But the bottom line is - and there's ample history to support this view - that once the "printing presses" get humming along it's going to be darn difficult to slow them down. _Noland