'GOP destroyed U.S. economy' (How: Gold. Tax cuts. Debts. Wars. Fat Cats. Class gap. .....)

[marmar]

Reagan insider: 'GOP destroyed U.S. economy'
Commentary: How: Gold. Tax cuts. Debts. Wars. Fat Cats. Class gap. No fiscal discipline

By Paul B. Farrell, MarketWatch


ARROYO GRANDE, Calif. (MarketWatch) -- "How my G.O.P. destroyed the U.S. economy." Yes, that is exactly what David Stockman, President Ronald Reagan's director of the Office of Management and Budget, wrote in a recent New York Times op-ed piece, "Four Deformations of the Apocalypse."

Get it? Not "destroying." The GOP has already "destroyed" the U.S. economy, setting up an "American Apocalypse."

Yes, Stockman is equally damning of the Democrats' Keynesian policies. But what this indictment by a party insider -- someone so close to the development of the Reaganomics ideology -- says about America, helps all of us better understand how America's toxic partisan-politics "holy war" is destroying not just the economy and capitalism, but the America dream. And unless this war stops soon, both parties will succeed in their collective death wish.

But why focus on Stockman's message? It's already lost in the 24/7 news cycle. Why? We need some introspection. Ask yourself: How did the great nation of America lose its moral compass and drift so far off course, to where our very survival is threatened?

We've arrived at a historic turning point as a nation that no longer needs outside enemies to destroy us, we are committing suicide. Democracy. Capitalism. The American dream. All dying. Why? Because of the economic decisions of the GOP the past 40 years, says this leading Reagan Republican.

Please listen with an open mind, no matter your party affiliation: This makes for a powerful history lesson, because it exposes how both parties are responsible for destroying the U.S. economy. Listen closely:

Reagan Republican: the GOP should file for bankruptcy

Stockman rushes into the ring swinging like a boxer: "If there were such a thing as Chapter 11 for politicians, the Republican push to extend the unaffordable Bush tax cuts would amount to a bankruptcy filing. The nation's public debt ... will soon reach $18 trillion." It screams "out for austerity and sacrifice." But instead, the GOP insists "that the nation's wealthiest taxpayers be spared even a three-percentage-point rate increase." ............(more)

The complete piece is at: http://www.marketwatch.com/story/reagan-insider-gop-destroyed-us-economy-2010-08-10

[Statistical]

1. They lost me on "step 1) Nixon dumps gold."

Anyone who thinks the Gold Standard would work today is either:
a) uneducated on incompatibilities of a gold standard and modern economies (deflation, inability to mine sufficient gold to keep pace with growing global economy)
b) a gold bug
c) trying to push a dubious agenda or angle.

[marmar]

2. "trying to push an agenda or angle"

Aren't all opinion pieces trying to push an agenda or angle? That's why they're opinion pieces.

[Statistical]

4. I guess I should clarify.

I mean pushing a dubious or fraudulent agenda.

i.e. like Ron Paul son pushing for return to gold standard and then it comes out that he has a couple million in gold & gold stocks.

Edited post for clarification.

[northernlights]

5. he didn't say to try to re-impose the gold standard today

he's saying if Nixon hadn't dumped the gold standard 40 years ago, we wouldn't be in the position we are today. That doesn't mean there wouldn't be other problems today. But it would have continued a forced discipline. That is all.

It's too late to rewind that clock. Within the context of that article, all we can do is brace ourselves for the financial shocks to come.

[Statistical]

6. The gold standard was unsustainable.

Global GDP was growing faster than mining of gold. All the gold mined in the history of mankind is a fraction of the money supply just in the US.

Productivity growing faster than money supply is a classic recipe for deflation. You think inflation is bad or hard to get out of try deflation. Deflation destroys everything.

Staying on gold standard would be no more effective than trying to resume it today.

"But it would have continued a forced discipline. That is all."
Yeah at the cost of crippling deflation. In a deflationary environment companies cut employment and cut them hard. Think unemployment is bad now just watch it double if we get 2%-3% deflation. Now imagine a deflationary environment where there is NOTHING the US govt or federal reserve can do. A situation where productivity simply needs to slow to the rate at which gold is being extracted. It is lunacy.

[northernlights]

9. strawman -- the point is that one is arguable and the other lunacy. he said the arguable one

There is a vast difference between saying we should not have left the gold standard 40 years ago and saying we should re-impose it. The first is arguable and does not damage the credibility of his other statements. The second is gold-bug lunacy -- and is not what he wrote.

And by changing what he wrote from something arguable to lunacy, you are justifying throwing out the baby with the bath water.

Besides which, it's been a very long time and I was just a student back then, but I think seem to remember we were suffering from strong inflation, not deflation. I have a vague memory of Nixon's wage and price control scheme in an attempt to tame inflation. It continued right through Ford's lame "Whip Inflation Now" campaign, ignoring his buttons and all.

In fact, it took Carter and Volker's extreme medicine to whip inflation and, sadly, deliver a recovering economy to Reagan. And we all know how well that worked out. :(

[Statistical]

10. Not leaving the gold standard is equally lunacy.

It was unsustainable. The idea that the prosperity of a nation (especially a nation with limited gold resources) should for all time be artificially be limited to the rate of global gold production IS LUNACY. It is even more stupid when you consider the US has a minority of gold reserves and thus fiscal policy would be dicatated by how much and how fast foreign entities decided to mine gold.

"And by changing what he wrote from something arguable to lunacy, you are justifying throwing out the baby with the bath water."
No I am not changing anything.

Here let me clarify and simplify beyond what I would consider necessary
A) returning to gold standard = lunacy
b) advocating US shouldn't have left gold standard = lunacy.

While the two things are not the same they can both be equally stupid.
Rush is a genius = stupid
Beck is Jesus = stupid

They two statements aren't the same thing but they are equally stupid.

Anyone arguing we should have stayed on Gold standard is either a gold bug, pushing a dubious agenda, or uneducated on the limits of fixing currency to a commodity. I doubt the author is uneducated so it dubious agenda or gold bug.

Nixon did the right thing by taking us off the Gold standard. If it hadn't happened under Nixon it would have been necessary to do it later. Waiting wouldn't have accomplished anything.

[northernlights]

11. Nixon may or may not have done the right thing by taking us off the gold standard

And that is something we'll never know for sure. But the fact is we did just fine on the gold standard for a long, long time. It's taken only 40 years off the gold standard to create a big fat mess.

The gold standard was not a measure of prosperity. It was just a measure of an artificial construct and a means of exchange. Prosperity is abundance. Production of goods brings prosperity. How many pieces of gold or paper required to purchase produce is irrelevent...as long as there is fair and equitable distribution of the means of exchange.

And the author is extremely educated -- in terms of actual experience as well as formal education. (Um, you do realize that this is a mea culpa by Reagan's very own economics advisor, don't you? That David Stockton, creator of Reaganomics, is saying straight out that Reagnomics and the GOP have completely destroyed our economy. And you somehow think that is all wrong because you disagree with his first point?!? Wow, just wow!!!!)

You are welcome to ignore David Stockton (and by association Paul Farrel for writing about Stockton's mea culpa) because you think he is mistaken in believing Nixon shouldn't have taken us off the gold standard. But I choose not to ignore him because, right or wrong about the gold standard (and personally I find good arguments on both sides) his other points are dead on, imho. And I suspect Stockton knows far better than any of us how disastrously wrong his and his cohorts economics policies truly were.

So I consider it worth reading. Your mileage may vary. That's your choice...and your loss (again imho). :shrug:

[EstimatedProphet]

13. He lost me on Stage 2

Stage 2. Crushing debts from domestic excesses, war mongering

Stockman says "the second unhappy change in the American economy has been the extraordinary growth of our public debt. In 1970 it was just 40% of gross domestic product, or about $425 billion. When it reaches $18 trillion, it will be 40 times greater than in 1970." Who's to blame? Not big-spending Dems, says Stockman, but "from the Republican Party's embrace, about three decades ago, of the insidious doctrine that deficits don't matter if they result from tax cuts."

While agree that the idea of ignoring deficits entirely because they come from tax cuts is absurd, the overarching point is silly. We can't compare the deficit we have today meaningfully to the deficit in 1970. What is important is the ratio, but he really just tosses that in as an aside. If we want to reduce the deficit GDP ratio, we should hire more people. More people hired means more income, and the ratio drops. It also means more employed people to pay off the deficit.

[mnhtnbb]

3. Class warfare, coming soon at a location near you.

Thanks, Ronnie.

:sarcasm:

[SpiralHawk]

7. Thanks a pantload, Republicon pretend 'conservatives'

You and your insane, radical republicon 'feed the rich' strategies have totally screwed America's economy.

[rocktivity]

8. David Stockman? Talk about a dead pundit walking.

Who exhumed HIS corpse?

:eyes:
rocktivity

[Octafish]

12. K&R

Stockman should know. He was one of the architects of Reaganomics.