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Geithner Says US will Get Spending Under Control Once Crisis Ends

By: Steve Johnson

4/23/2009 - 41 Comments

On Wednesday, US Treasury Secretary Timothy Geithner said the US bears substantial blame for the global financial crisis.

Geithner stressed that soon after the crisis, the US will need to get spending under control. But for now he is willing to live with massive budget deficits to spur economic activity. 

"That is very important to do, because the American people and investors (around the world) need to understand that we will have the will and the commitment as a country to go back to ... living within our means,"

"To get to that point we have to get a recovery in place."

What he really means

First of all the timeframe that Geithner is talking about is important to the discussion because the government expansion that in underway is open-ended – with most of the TARP money and bailout money expected to be spent over a five year period which can be extended indefinitly.  This massive government spending will continue throughout Geithners term in office and the next administration will have to do the spending cuts. 

The good news is that government officials are starting to give up and let the free market take over as they should have from the beginning.  Geithner is right about the government monetary policy being the primary cause of the recession, but he failed to mention the specifics.

Like how the congressional Finance and Banking Committee (Chaired by Christopher Dodd and Barney Frank) created the housing bubble by supporting their social agenda to create housing welfare by giving Freddie Mac and Fannie Mae government support which allowed them to become monopolistic entities that are now ‘too big to fail’. 

Geithner also didn’t mention that the Federal Reserve is the primary cause of the credit expansion that drove the last decade of overspending by holding interest rates under market rates for many years to avoid the overspending of the previous administration - as Senator Ron Paul has been warning us about for many years.

I think the real audience that Geithner is speaking to is the rest of the world so that foreign nations continue buying T-Bonds and the current administration avoids the looming dollar crisis.  This is just like I wrote about last week, when Obama was addressing the world more than the public.

Facing the Recession

The bottom of the recession will be when the government gives up and lets the free market do what it needs to do and this comment from Geithner is the first sign that they are headed in that direction.

As I wrote before, eventually the nation will have to face the recession and the sooner the government starts facing the recession the better.

Luckily Geithner can say things like, “we will have the will and the commitment as a country to go back to ... living within our means” because he is not an elected official and no elected official wants to tell the public that the good times are over and the jobs are gone.

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The Case Against the Fed

This book, written by Murray Rothbard, an economist and historian of fairly well known repute, is a scathing attack on not only the Federal Reserve, but the interests that created this institution. Rothbard explains how the Federal Reserve is the true source in the destruction of wealth, which has led to the destruction of the middle class and continues to sift money into the hands of the wealthiest.

Crash Proof

Peter Schiff has predicted the economic hardship more accurately then any other economist in the world in this book. Everything from the housing crash to the credit crunch to the stock market. Peter has a plan to help you servive the crash. Peter explains why the Wall Street investment firms are still trying to sell you stocks, and was the house prices are likely to continue to decline for years to come.

Day of Reckoning

In Day of Reckoning, Pat Buchanan reveals the true existential crisis of the nation and shows how President Bush's post-9/11 conversion to an ideology of 'democratism' led us to the precipice of strategic disaster abroad and savage division at home. Ideology, writes Buchanan, is a false god that seeks vainly to create a paradise on earth. While free enterprise is good, the worship of a 'free trade' that is destroying the dollar, de-industrializing America, and ending our economic independence, is cult madness.

Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse

In discussions of today's economic meltdown and what to do about it, the Federal Reserve is a stealth helicopter: it never shows up on the radar. With the exception of a few esoteric specialists and those Ron Paul Revolutionaries who burst into chants of "Abolish the Fed!" Historian Thomas Woods notes in this important book, the Federal Reserve bears a large part of the blame for the mess we're in. In the first part of "Meltdown," Woods shows how both in theory and in practice, Fed policy fueled an artificial boom and is now leading us to a much larger meltdown.