Funny money won’t do

The Roaring ’20s roared because the Federal Reserve pumped make-believe money into the economy. The United States was superficially on the gold standard, but banks practiced fractional reserve banking – loaning money they didn’t have.

The bubble burst in 1929. As the fake money started to disappear, prices dropped, so President Hoover tried to artificially support prices. Hoover’s actions turned the recession into a depression.

When FDR gained office, he put Hoover’s programs on steroids. Hoover and FDR extended the recession and turned it into the Great Depression.

Now, as in the ’20s, the Federal Reserve has been inflating. GWB has been trying to support inflated prices with “stimulus” packages. Obama has already said the current inflationary programs are not inflationary enough and plans to put GWB’s programs on steroids.

Politicians can pass all the legislation they want, but they can’t revoke the laws of economics. Government produces nothing of value. As it throws money at favored beneficiaries, it must take these resources from others. Neither GWB nor Obama has been forthright in telling us what sectors of the nation’s economy they want to depress for the benefit of their favored recipients.

David Wordinger

Medical Lake