Place Your Bet On Stupidity

by Alan Caruba

We are well into a major recession and I think most people are betting on the stupidity and cupidity of our nation's leaders, elected and appointed, to ensure that it happens. One need only look at previous efforts to effect some control over the economy while, at the same time, running it into the ground.

From the day—August 15, 1971—that President Nixon took the nation off the gold standard, detaching the dollar from the enduring value of gold, America became a place where the dollar was worth whatever anyone thought it was worth. It's a lot like those holiday and post-Christmas sales where a sweater priced at $50 prior to the onslaught of the financial meltdown was priced down to $15. Same sweater, different value. Two suits, one free was the offer of a local retailer.

As columnist Robert J. Samuelson recently wrote, "We have a $14 trillion economy. The idea that presidents can control it lies between an exaggeration and an illusion." Samuelson cited Nixon's imposition in 1971 of wage and price controls in part to prevent inflation from jeopardizing his reelection. "The economy boomed in 1972. But the controls were a time-delayed disaster. When they were removed, inflation exploded to 12 percent in 1974."

President Carter was an even greater disaster while he occupied the Oval Office. His administration imposed credit controls to squelch the raging inflation from the Nixon administration. "The result was a short recession that helped seal Carter's defeat, along with his failure to face down the Iranians who had taken U.S. diplomats hostage.

Like the incoming President-elect, Carter hated the oil industry, imposing a "windfall profits" tax on it and even had solar panels installed on the roof of the White House. The result was to severely impact our domestic oil industry in ways that has rendered the U.S. more dependent than before on foreign oil. When Reagan took office, he cut taxes and instituted spending restraints. He also had the solar panels removed.

So where are we today? Read more>>>>