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If All Hope is Placed In Obama and He Fails, Then What?

By: Steve Johnson

6/4/2009 - 23 Comments

It amazes me that almost all financial media outlets have placed all their hope in Obamas’ economic central planning to revive the economy.

The critics of the largest budget expansion in history are being minimized on radio, TV and the Internet.   It’s like if no one in the liberal media (who helped get Obama elected) wants to question the idea of expanding the money supply by trillions of dollars. 

When the recession started, the Bush economic team was doing the same thing as the Obama economic team to a smaller degree.  But, now that the 100 day honeymoon is over, no one wants to talk about the potential consequences of the monetary policy of the Obama administration. 

Unemployment Continues to Rise

Tomorrow the unemployment rate is likely to reach 9.2% with another 500k jobs lost last months.  So far 4.7 million jobs have been lost and all the financial media want to report is that the Obama stimulus has (perhaps) saved 150k jobs. 

When will the media and the people wake up, smell the coffee and realize that the stimulus package is only making things worse and causing more long-term damage to the economy?

In an article today, I read states are proposing $24 billion in new taxes

"States are poised to pass as much as $24 billion in tax and fee hikes in coming weeks, as they struggle to balance their budgets amid the worst economic downturn since the Great Depression, a report released Thursday found."

How are consumers that our living on credit and underwater on their mortgages going to pay these tax increases?

Government Budgets Needs To Be Cut In Half

The big difference between the state government and federal government is that the federal government has the Federal Reserve, which is expanding the currency to pay for the expansion of the federal government.  The states do not have a printing press and they cannot borrow money indefinitely.

Governments need to drastically cut spending and turn up the support for entrepreneurs to create new jobs.  The trillions that Obama is spending to stimulate the economy is in many ways delaying the recovery.  Taking money from successful businesses (through taxes) and giving it to unsuccessful businesses (like GM) does not allow the new businesses to get the capital loans or the employees that they need to build their business. 

Also, the additional ‘red tape’ that the government is adding with new banking regulations and trade-and-cap (oil and coal) regulation and the governments influence in managing health care work against entrepreneurs.  These new policies will increase the costs of energy, banking and health care. 

The real ‘Change We Need’ is to get this big government guys out of office and elect small government guys.  We need to elect small government guys at every level within the state and federal governments to reduce the burned of government on the economy so that the entrepreneurs can rebuild a marketplace with new jobs. 

The federal government needs to take another look at the budget and instead of increasing the budget by 2 trillion; they need to cut the budget in half and make it as easy as possible for small businesses to get started by dropping all policies that hinder them.

If Obama Fails

Right now everyone seems to believe that Obama is going to pull off the largest upset of his life and turn around the economy by re-inflating the bubble economy.  If he succeeds, we would only be facing another recession when the inflated bubble bursts again.  And if he fails – which no one wants to discuss - but if he fails - we will soon be facing rising inflation, increasing energy costs and a sinking dollar, all on top of the recession.

In recent months the bond market is starting to tell us that the world is not willing to support our economic plans. 

And there is no easy way for the Federal Reserve to extract the trillions that they put into the economy, which is essential to stop a massive wave of inflation that is headed towards our short line. 

The price of oil and gold are already on a steep upward path. Very soon, the mainstream financial talking heads that everyone is listening to will be saying the same thing they said when the housing market collapse started, “What happen, and why didn’t anyone see this coming?”

The worst part about this is that many of the central banks around the world are following Obama’s lead and inflation their currencies as well.  Now that no currency is backed by anything anymore, central bankers are free to inflate their currencies and that is what they are doing at an alarming rate.

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