The American Spectator : The Great Obamaflation

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The Great Obamaflation

By Philip Klein on 2.24.09 @ 6:10AM

In attempting to play the savior of the ailing American economy, President Obama is sowing the seeds of our next crisis.

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Unlike other types of inflation, this scenario would also have major foreign policy implications. If the Fed were to print money to buy up bonds with inflated currency, it would essentially mean that the U.S. government was defaulting on its debt, which would be an international relations headache given the substantial amount of U.S. debt that is owned by other countries.

Ryan said that our problems are made even worse by the looming $56 trillion entitlement crisis.

"What we didn't have after the Great Depression and the Carter years was the entitlement explosion," he said. "So you've got unprecedented borrowing in the credit markets because of the stimulus and deficits and right after that you have an explosion in spending in these unfunded liabilities….Fundamental monetary policy leads you to conclude that we are baking inflation into the cake. It's not going to happen now, it's going to take a while, but it is going to come."

President Obama organized a "fiscal responsibility summit" on Monday to address the nation's long-term debt, and he said the budget he's releasing on Thursday would slash the deficit in half by 2013. But he'll have difficultly following through on such promises given the continued demand for bailouts and his ambitious domestic agenda, not to mention resistance from Congressional Democrats.

Ryan said that now is the ideal time for Republicans "to become the party of sound money again."

As part of that effort, he said that he carries around a 50 billion dollar bill from Zimbabwe in his wallet to educate citizens in his Wisconsin district about what can happen if a country neglects its currency, and he recently gave a talk on the subject at a local high school.

"They don't really know what you're talking about at first," he conceded. "But as soon as you start explaining the consequences of inflation, people understand what you're talking about."

By the fall of 1980, inflation was still high, despite President Carter's calls for fiscal austerity and restraint among average Americans, providing a ripe target for Ronald Reagan.

"We don't have inflation because the people are living too well," Reagan charged in their presidential debate. "We have inflation because the government is living too well."

President Obama may still be enjoying high approval ratings, but by pursuing policies that are sowing the seeds of our next crisis, he could be writing his own political obituary.

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About the Author

Philip Klein is The American Spectator's Washington correspondent. You can follow him on Twitter at: http://twitter.com/Philipaklein

Letter to the Editor View all comments (28) | Leave a comment

Steve| 2.24.09 @ 6:33AM

And therein lies the answer to so many problems: pension underfunding, social security underfunding, etc.

We simply debauch the currency.

We have become a banana republic; it's time we stopped pretending we're not.

WRTolkas| 2.24.09 @ 7:41AM

I know that inflation is coming. Other than stay out of debt, how does one prepare?

Eric| 2.24.09 @ 7:48AM

Why does everyone keep letting Obama off the hook for the current depression, as if he just arrived in Washington? The depression did not originate "on Bush's watch", it started on the watch of the party that took control of Congress in the previous election cycle. The President does not originate economic legislation; the Congress does. Obama was a rising leader of the majority party in Congress that controlled all tax, spending, and economic legislation. Obama was part of the majority that blocked Bush's and McCain's attempts to rein in Fannie Mae and the housing finance debacle that has wrecked our economy and destroyed the retirement savings of millions.
We need to start holding the Obama Democrats accountable for the numerous Ponzi scams they started or willfully neglected.

Gill O'Teen| 2.24.09 @ 8:02AM

Eric, "Ponzi" scheme seems a rather archaic term in the "Hope and Change" era of O-bum-ah. I prefer to use a more contemporary moniker for a Ponzi swindel imposed by government: Pelosi scheme.

Alan Brooks| 2.24.09 @ 8:46AM

i've been reading 'The Sovereign Individual;
gnarly.

bluecollarbytes| 2.24.09 @ 9:33AM

If we could just get the foreign policy analysts who spend time commenting on blogs, into the govt,.....well...never mind.

Rick Josey| 2.24.09 @ 9:46AM

Many Americans were duped during the last election. When asked who had been in charge of Congress, one citizen answered with a blank stare, "Well, I guess the Republicans...since Bush is President." An uninformed populace means uninformed choices...and this can lead to disastrous consequences. Especially by this radical administration.

Senator Chuck Shumer's remark that Americans "don't mind a little pork" reveals the liberal mind toward wasteful spending. And when you couple that with Obama's slip-of-the-tongue about "spreading the wealth around," you have the basic picture.

The liberals want to tax us all, dole out the goodies and thus maintain their power with a grateful citizenry. The Nanny State, a socialistic system that provides for all our needs. Sounds good, doesn't it. But socialism always fails. Kills initiative, destroys production and demeans the people...who are considered too stupid to make their own rational decisions.

So, Schumer and Obama have told us what they want to do with our money. And Holder has stated the reason why the government has to do it: we are "a nation of cowards." So it's time for the Nanny State to rise up and make decisions for us.

I'm going to send my angry, 85-year-old veteran neighbor to Washington. He'll clean their clock.

www.PatriotHangout.com

Obama Rulzzzz| 2.24.09 @ 10:03AM

How's everyone today here at Craptator.org? Er, I meant Spectator.org. Just as whiny and bitchy and grumpy as ever?

getalifevirginia| 2.24.09 @ 10:10AM

Hello "Obama Rulzzz"

How's lala land today. Still avoiding reality and kissn' the big O.

Texas Male| 2.24.09 @ 10:25AM

As the media deflects the blame for this mess away from the true culprits like Barney Frank, Chris Dodd, and others, the situation becomes worse by the day. America is slipping fast into a morass of our own making and the citizenry has been dumbed down to a sufficient level that there may be no bottom to the level of economic collapse and totalitarianistic socialism we will experience.

With the media's help and their ignorant followers , the same villians are still driving this train. The financial institutions, labor unions, Wall Street, giant insurance companies, and far left universities are the other half of the equation that leaves the hard working, average citizen completely screwed. There is no hope at this point. In fact, we are already so far past our founding principles the much of it will not be able to be undone.

frost| 2.24.09 @ 11:19AM

This guy is scary. Very much so. He's pushing it, and it's scary!
I read somewhere that the Liberal Left's adherents are not interested in reason or truth. These neo-Marxists fight instead with an almost “religious” fervor that reflects blind faith in socialism -- and what they are after is nothing less than total power to implement their view. They are not the slightest bit interested in facts or logic or any counterarguments. No, they’re so busy implementing their own dogmatic style of Inquisition, or the Salem Witch Trials, and refuse to consider any new ideas, thoughts, or real world results. Facts rarely matter to them.
But the only problem is that they want to impose their policies nationwide. They want everyone to live by their rules. The definition of that is socialist fascism.
Yes, some people are leaving the more dysfunctional states and cities for the more realistic/functional states and cities, but they seem to be bringing their wacko liberal ideas with them -- which bring the same problems to those areas (witness North Carolina with its invasion from Northeastern liberal enclaves). When New York and California ask for federal bailouts, the rest of the states should tell them to get lost -- they wanted their ridiculous policies, so live with them. Liberal policies = the definition of insanity, doing the same thing over and over again expecting different results.
We freedom-loving people, however, had better get ready for Civil War II if we want to see the usurpation of our freedom stopped. And, better get used to the prospect that nothing less than armed conflict will stop the relentless advance of the liberal-left. We have seen the liberal-left in action and its onslaught against American freedom proceed unabated for generations. They’re not likely to stop - - - on their own, at least. Oh, one additional thing - - if you haven't already been sucked-in to the propaganda, the labels, the latest euphemisms for “Liberal” are, of course, “reformist” and “progressive.”
If Liberal leftists didn’t have double standards they would have no standards at all; it's boundless toxicity!
Oh – and then there was the startling revelation that the US will give $900-million to repair the Gaza strip – what the Hamas/Arabs had destroyed?!? What's next? Maybe resettling in Costa Rica or Brazil..... my (our?) country is gone.

Howard| 2.24.09 @ 12:40PM

Obama will always get a free ride as long as the Mainstream Media has breath. They will find some way to blame Republicans and capitalists for the problems.

Shamus| 2.24.09 @ 1:13PM

The US has turned into an Obama republic.

Obama Rulz Yo Stimulus Package| 2.24.09 @ 1:58PM

Get a life, getalifevirginia!

Jason| 2.24.09 @ 2:37PM

Stagflation will be plaguing us soon. Be ready to become reacquainted with the misery index.
http://www.rightklik.net/

Pete| 2.24.09 @ 2:40PM

Obam Rulz, we're all waiting for an original idea from your amazingly critical mind. You're right about one thing: Obamar does rule.

Sara123| 2.24.09 @ 3:25PM

If nothing else, the threat of losing political power should sober up Obama and the Democrats in Congress. They are acting irresponsibility and over shooting their porky pay offs to left wing organizations like Planned Parenthood and ACORN.

What is going to happen as Obama moves the Census Bureau to the White House? He's doing that and much of the spending to secure Democrat Power beyond elections. Is this legal?

Dwight Thorne| 2.24.09 @ 3:39PM

Peterson crew can continue to whine about generation inequality even after we just saw the most enormous
redistribution from older generations to younger generations in the history of the world. The $8 trillion
in wealth lost in the collapse of the housing bubble was mostly held by older workers and retirees.
The $7tn lost in the stock market collapse was also primarily held by older workers and retirees.

The beneficiaries of these huge price declines will be younger workers, and those yet to enter the labour force,
who will be able to buy homes and stock at prices far lower than they would have paid just two years ago.
This huge generational redistribution would cause serious economists to change their view of inter-generational fairness.

We have right to be outraged that a Wall Street billionaire is trying to take away the core social insurance programmes
that they will be dependent on in their old age. It was the Wall Street crew that wrecked the economy, costing millions
of people their jobs and tens of millions their life savings. Now Peterson wants to use much of his Wall Street winnings
to take away the only source of support that tens of millions of retirees have left.

No one expects ethical behaviour from Wall Street tycoons. The public does expect a little more from the media, however.
The people who report on budget issues should be able to step back and assess the issues themselves rather than just
parroting the lines that the Peterson Foundation feeds them.

Peterson was US commerce secretary in the Nixon administration. He then went on to make billions of dollars as one of the top executives at the Blackstone Group, a private equity fund.
Peterson is known as one of the top beneficiaries of the fund managers' tax break, through which he personally pocketed
tens of millions of dollars.

Obama Rulz Yo Momma| 2.24.09 @ 4:14PM

Pete, stop being an idiot, for pete's sake!

i hate frosty| 2.24.09 @ 4:15PM

frost, you're a complete lunatic.

Dile Thium| 2.24.09 @ 9:56PM

When the masses don't understand history and economics, and fall for this double speak that is being promoted as "deficit" reduction, we are indeed in trouble. God save us from these creatures from Orwell's "Animal Farm".

Evelyn Guzman| 2.25.09 @ 10:52AM

Inflation will come, there's no doubt about that, but what is the alternative? Doing nothing will make the matter worst. We'll surely be in depression otherwise. Wouldn't you say inflation is better than depression? So I guess taking the lesser of the two evils is the only path open to us.

Evelyn Guzman
Debt Challenger

Michael Tomlinson| 2.25.09 @ 11:29AM

Eric nailed it when he pointed out the current financial crisis is the result of the Democrat Congress! Under Bush and Republicans the economy was growing at 3-5% annually and the deficit was shrinking based upon GDP. Once Democrats took control of Congress WHAMO the economy collapsed.

Evelyn Guzman is wrong. Doing nothing is better than doing what Obama is doing. FDR's "New Deal" made a 2-3 year depression last 13 years and only ended in 1943 with the slaughter of half a million Americans in a war that could have been avoided if FDR had been a real leader. (Note: Obama is off to a good start in impersonating the idiocy of FDR.)

The silver lining might be the 2010 mid-term elections and the 2012 Presidential election. Republicans should make them a referendum on Obama/Democrat's failed policies and call for a mandate to scrap the current punitive tax system, cut Democrat special interest projects out of the budget, eliminate earmarks, enact zero base line budgeting, flush Obamanomics down the toilet, put the country on a sound fiscal footing with hard currency and renew the war to kill Muslim extremists who undoubtedly in the age of Obama's appeasement will strike the US again.

Stop WW3 before it's too late| 2.25.09 @ 1:09PM

America & the UK have new agenda's they want to take on the big boys. China and Russia. They plan to use Iran as the go between, like they did with Iraq under Saddam, will the Iranians fall for it, because after they are done they want to take out Iran. America get Iraqi and Iranian oil and gas, and Britain and Europe gets Russian oil and gas.

I think the only country that has to worry at the moment is Pakistan and Afghanistan. America has nothing to worry about, Obama knows that. It's the false flag operations people have to be carefull of.
2010 is going to be the lead up to WW3. What people want to worry about is how to stop the government making another foolish mistake worse than the war in Iraq.

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