Monday, February 12, 2018

Obamanomics Is Dead

From American Greatness:
In most cases, the Democrats only do well when America is in dire straits. And, that’d be all right, if the Democrats were the turnaround party that they claim to be. Yet, when elected, the Democrats rarely change things for the better. Instead, they simply exploit the opportunity to further expand the administrative state, enrich their fellow partisans, and further weaken the country. Keep in mind that FDR’s treasury secretary, Henry Morgenthau, Jr., testified to Congress in 1939 that FDR’s economic policies had done little to reverse the Great Depression. Today, many economists believe that FDR’s programs prolonged the crisis.

Looking at what’s happening presently in the stock market, we see a similar thing happening. During the Obama years, we were told by former President Obama to accept the “new normal” of barely two percent growth rates and chronically high unemployment. For the entirety of the Obama Administration, the economy sputtered along with anemic growth such that the Federal Reserve had to artificially induce economic activity through loose monetary policy. The Fed kept interest rates low, allowed for unmanageable levels of borrowing, and kept printing money. This accounts for how the stock market soared during the Obama years in spite of wages being low, unemployment being high, and overall growth lagging. The eight years of Obamanomics benefited a handful of investors and harmed everyone else.

Since Donald Trump’s election, however, the White House has spearheaded an historic reduction in onerous government regulations; the markets reacted to Trump’s election with great exuberance and anticipation; unemployment has reached historic lows; a massive tax cut has spurred the expansion of businesses (and therefore opportunity unlike anything since the Reagan years), and wages have gone up to their highest point in 17 years. Whenever a White House engages in a strong fiscal policy of the sort that the Trump Administration has implemented, the Fed has to step in and raise interest rates. (Read more.)

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