We have tried that before. Burt Folsom, who has written a book on Franklin Roosevelt’s economic policies and spoke in Wichita on that topic, warns us of the folly of government spending as a means to economic recovery. Henry Morgenthau, Secretary of the Treasury to FDR, said this seven years into the New Deal: “Now, gentlemen, we have tried spending money. We are spending more than we have ever spent before and it does not work.” … Some have charged that this quotation is a fabrication, but Folsom has the proof in his article We Have Tried Spending Money. … The quotation by Morganthau continues with: “And I have just one interest, and if I am wrong … somebody else can have my job. I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises. … I say after eight years of this Administration we have just as much unemployment as when we started. … And an enormous debt to boot.”
How can the Fed be so clueless? Investor’s Business Daily: “Federal Reserve Chairman Ben Bernanke says he’s puzzled by the failure of the economy to respond to our government’s many ministrations. Which explains much of why our economy is such a mess. … Not to be rude, but can the nation’s top banker really be so clueless? Anyone with half a lick of common sense looking at our economy knows what’s wrong: We’ve spent the better part of three years with government making the most extraordinary interventions in the economy in our nation’s history. Government spending, as a share of the economy, has soared 25%. Regulations, many of them arbitrary and foolish, such as the ban on incandescent light bulbs, have never been more numerous.” … The piece goes on to list many of the unwise policies the government has followed: ARRA stimulus, TARP, GM and Chrysler, Dodd-Frank, etc. In conclusion: “A handful of bureaucrats can never set prices or allocate goods or decide what should be made as efficiently as millions of people acting in their own interest through a free and open market. Our policymakers seem to have forgotten this. They make statements that indicate they don’t know the damage their policies are doing or they are willfully oblivious to them.”
Deficit is probably worse than thought. “We should be prepared for upward revisions in official deficit projections in the years ahead — even if a deal is struck,” writes Lawrence B. Lindsey in The Wall Street Journal. The reasons why projects of deficits are too optimistic are three: The interest rates being contemplated for Treasury borrowing are probably too low, the growth rates for the economy are too large, and the long-run costs of ObamaCare are way too low. Writes Lindsey: “There is no way to raise taxes enough to cover these problems. The tax-the-rich proposals of the Obama administration raise about $700 billion, less than a fifth of the budgetary consequences of the excess economic growth projected in their forecast. The whole $700 billion collected over 10 years would not even cover the difference in interest costs in any one year at the end of the decade between current rates and the average cost of Treasury borrowing over the last 20 years.” He recommends long-term reduction in entitlement spending as the only cure. See The deficit is worse than we think: Normal interest rates would raise debt-service costs by $4.9 trillion over 10 years, dwarfing the savings from any currently contemplated budget deal..
Blue pill or red pill? “Great expectations” are placed on the hope of Comparative Effectiveness Research (CER) as a way to save money on health care costs, both in the private and public sector. Now a report published by Manhattan Institute finds that this technique, despite its appealing name and promise, may not be the magic pill that President Obama is relying on: “This result seems counterintuitive: How can it be that, when a CER study shows no difference between two drugs, limiting coverage for the more expensive drug could actually increase costs?” The report explains that individuals are different, and what applies to the “average” patient may not be right for a large number of other patients. A second reason is “variance in dependence in patient responses across therapies.” The report provides illustrations of where CER-based policies cost more. … Concluding, the executive summary states: “Our results suggest that CER will not fulfill its promise unless it is implemented differently by researchers and understood differently by policymakers. Simply put, seeking the treatment that is most effective on average will not improve health or save money. However, CER can be conducted in a way that takes difference and dependence into account and measures their effect. If CER is applied in this way — as a tool for matching individual patients to the best treatments for those individuals — it will realize its potential to reduce costs without inhibiting freedom of choice for doctors and patients.” … The report is Blue Pill or Red Pill: The Limits of Comparative Effectiveness Research
Even quicker. “For the roughly four million homeowners who have fallen behind on their mortgage payments, the federal government is offering yet another remedy: free money to catch up on their loans.” See SmartMoney: More Money for Struggling Homeowners. … The Kansas Department of Health and Environment (KDHE) has issued a boil water advisory for the city of Waterville, which is located in Marshall County. I guess there’s no water in Waterville today. … Strong public support found for “Cut, cap, and balance,” a program to bring the federal budget under control. See National Taxpayer Union: New Poll Highlights Public Support for Cut, Cap and Balance. … Rasmussen: “Most voters continue to feel America needs to do more to develop domestic gas and oil resources. They also still give the edge to finding new sources of oil over reducing gas and oil consumption.” … Becker on Speculators: “Put differently, speculation tends to be stabilizing when speculators are making money because they have correct expectations about price movements, and destabilizing when they are losing money because their expectations turn out to be wrong. Given that the fundamentals imply large price movements from rather small shocks to supply and demand, and that successful speculation tends to moderate price movements, it is hard to believe that speculation has played a major role in causing the large swings in oil prices.” Do you hear that, Bill O’Reilly?