Economic Recession - Does history support Obama

Unfortunately, when it comes to economic recession, history becomes clouded based on your political beliefs. The question I wish to answer is whether or not economic recessions and their severity have been at all shortened by the intrusion of government into a country's economic life. As it pertains to our current situation, the question becomes whether or not President Obama and the Congress spending $800 billion in fiscal stimulus will get the job done? Will it shorten the recession, or perhaps even make it worse? If you listen to the politicians and the talking heads on television, I personally guarantee one thing, they all lie and distort reality. The commentators on television understand nothing. They are neither intelligent nor informative, because they are not picked for those qualities. Television is about entertainment, and has nothing to do with giving you the news. If it did, there would be more people like Walter Cronkite, or Eric Sevareid, and others as opposed to mediocre people like Katie Couric.

If you are to understand the economy, than you must understand economics and history. This is where we are at right now. President Obama has spent about $120 billion of the stimulus money that was provided. This is equal to about 1% of the Gross Domestic Product of this country. It's actually less than 1%. When you look at the $120 billion, about $53 billion of that number went to tax cuts which are temporary in nature. Some of it went to Medicaid expenditures, food stamps and as you can imagine unemployment benefits.

The President talked a big game about highway construction and bridges, but as far as actual expenditures, that number is about a billion dollars, yes, one billion dollars. There is committed money for the future, but you can't eat the future, and that money needs to be spent today, not two years from now.

There is a notion flying around that when the Great Depression began back in 1929, the government cut spending as opposed to what the Keynesians would do, which is expand spending. I have read this everywhere. When one checks the truth however, former President Hoover did not slash spending during his Administration which went from 1929 until the beginning of 1933. Spending was up 6% in 1930, over 7% in 1931, and 30% plus in 1932. Keep in mind that prices were collapsing during those years, which means that government spending was much bigger than the numbers I just provided you.

The average recession during the 42 year period from 1887 until 1929 lasted about 10 months. If you look at the additional 42 year period from 1887 until 1929, there was only one that lasted as long as 16 months. There was not government intervention during either of these periods, and there was no Federal Reserve Board either. The Fed was created by Act of Congress in 1913 under Woodrow Wilson.

Objectively it looks like recessions have gotten longer since the 1920's. The one in 1920 went two years, and then there was a four year one from 1929 until 1933, and then we slipped right back from 1937 until 1938. This occurred in spite of the creation of the Federal Reserve Board and bank.

I now believe that the recession under Presidents Bush and Obama may have ended in August of 2009. We just might have turned, and I do not believe the Congress ended this thing with an $800 billion stimulus package. It ended because the banking system was saved by injecting close to $1 trillion into it which belongs to the American taxpayer. It ended because the American people believe that the system was saved by government intervention, which indeed it was. The full faith and credit of the government of the United States ended it, which means the American people saved the system from going over a cliff. What we must remember is that this is the taxpayer's money and no one else's.