Obama's 'solution' for what ails us is to utilize two common political treatments for recessions. First, the standard Monetarist 'Easy Money' solution by lowering interest rates. Second, the Keynesian 'Stimulus'. The unfortunate situation we face is really only getting worse because he cannot do the second without the first — there simply isn't enough money interested in supporting more debt. The solution? Print more money, a concept I discussed in an earlier post.
The printing of money allows banks to purchase Treasury Debt, which funds the deficit, which they then sell back to the Fed in order to keep their reserves intact.
Europe has taken a remarkably different approach. The Eurozone wants to emerge from its difficulties in economically healthy fashion, rather than saddled with massive debt. Some European nations have such huge debt that the only sensible track to follow for other Euro nations that are growing modestly is to manage with restraint. They've been backed into a corner, but it's a good corner to be backed into.
Some are not shy about telling Obama why he's wrong.
If Obama was the head of a sports league having economic struggles, BALCO would still be in business. His steroid policy would put individual players at risk in order to keep interest in the league high based on new records. Like Barry Bonds' records, people will soon wonder how things got to this point. Will Congress review Obama's steroid policy and chart a new course?
