Tuesday, February 10, 2009

Should the government even be doing bailouts?

This was the question that Dr. Robert Higgs of the California based Independent Institute wrote. In an article, he accurately portrayed how the Founding Fathers intended the federal government to be limited in scope. He challenged anyone to find where the Feds are authorized by the Constitution to fund "global warming research, urban mass transit, food stamps, unemployment insurance, Medicaid or countless other items". Obviously, there is nothing in the Constitution that remotely resembles this authority.

So where did it all come from? As you can guess, a lot of it transpired during the Great Depression. FDR is the greatest abuser of power in the history of the American Presidency. Like Obama is trying to do, he used a catastrophe to expand his power base. He even went so far as to try to intimidate the Supreme Court into siding with him. And, this is the person who's model we are now following.

Why do I bring all this up? Simply, because the decisions of the Obama administration are going to put us into another Great Depression. History is now showing that FDR's policies actually made things worse. Stimulus was something that he started and it prolonged the Great Depression. Every recession before it was quickly reversed because the government did not get involved. In 1893, there was a depression which was turned without stimulus. Also, 1920-21 had a major recession which quickly reversed itself. Again, there was no stimulus.

So, what do our fearless leaders in Washington do? Pass a spending bill that will eventually cause high inflation and will do little to fix the economic problem. The best course of action when it comes to government is no action.

(If you want to read this article it was found in the Feb. 10, 2009 edition of Investor's Business Daily)

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