Friday, March 20, 2009

The Wrecking Ball

...is FDR's catch phrase, "bold, persistent, experimentation."

Watching Obama, Bush, Paulson, Dodd, Frank, Pelosi, Bernanke, and Geithner wreck the United States is pretty painful. But at least 500M Americans haven't lost their jobs. We are now in the jaws of the worst depression our country has known, worse than the 1830s, worse than the 1930s. What lessons can we learn from those events?

Andrew Jackson conquered the 1830s depression with a model for the ages. He personally executed the central bank in town square. The end result was so positive that the Industrial Revolution burst forth. Ding, dong, the Wicked Witch was dead. Industrialized post-Jackson America was the only modern nation without a central bank pilfering its national treasure, we quickly became the wealthiest nation on earth.

In 1932, life still seemed normal, though prices had become depressed. That illusion did not last. FDR, who unlike Jackson was a dupe of the latest reincarnation of the king's bank, the Federal Reserve, accidentally (or intentionality) destroyed America on their behalf. The next 20 years were hell on Earth. What happened?

FDR's greatest mistake wasn't toilet-flushing some $500B on wantonly wasteful New Deal programs, directly aimed at enriching the world's wealthiest bankers. No, at least people could plan for the swindling of our innocent children.

FDR's greatest mistake was something much simpler, it should sound familiar to all of us: arbitrarily changing the rules of American capitalism, almost daily. Businesses were left with no choice but to give up on feasible profit. Amity Shlaes, author of The Forgotten Man, once put it this way,
The New Deal centerpiece, the National Recovery Administration, helped some businesses compete and criminalized others for the same behavior. Sometimes Roosevelt goaded federal prosecutors into harassing corporate executives. Other times, he schmoozed the same execs at the White House. In 1936, FDR pushed through deficit spending. In 1937, he was Mr. Budget Hawk.
FDR freely admitted that he had no earthly idea what he was doing. Shlaes relays a story from Treasury Secretary Henry Morgenthau, who in November of 1933 asked Roosevelt why he decided to raise the price of gold by 21 cents that Friday? FDR replied, "Because it is three times seven."

Is it any wonder FDR ruined the world economy and plunged our nation into war? The untimely slaughter of nearly 100M people should be a lesson to us that bold, persistent, experimentation is no joke--but so far, no dice.

16 comments:

  1. "Because it is three times seven....

    Now it's crash x burn

    ps thanks FDR, major output from you in March on your blog

    ReplyDelete
  2. AJ must have been a hero of Ludwig von Mises...

    ReplyDelete
  3. As soon as Andrew Jackson left office, all hell broke loose: the panic of 1837, a severe 5-year depression, massive bank failures. I am not sure that history is quite as black and white as you make it out to be.

    ReplyDelete
  4. Hi Fdr,

    Still short Gold?

    By the way congratulation for your blog..I like it...Keep up the good work.
    Bullforever

    ReplyDelete
  5. Market internals deteriorating. We may have started impulse 1 of 5 of {5} of 1. Dow 5900 here we come.

    ReplyDelete
  6. Here is my own TRADING ALERT. This market is going to get smoked over the next 2 weeks.

    ReplyDelete
  7. And here is my trading alert...got ammo?

    ReplyDelete
  8. "As soon as Andrew Jackson left office, all hell broke loose: the panic of 1837, a severe 5-year depression, massive bank failures. I am not sure that history is quite as black and white as you make it out to be."

    It is never painless to remove a malignant cancer.

    Once the SBUS realized they were actually going to lose to Jackson, they openly threatened to destroy the United States unless Jackson was stopped. They ultimately made good on the threat and tried to pull every dime of currency out of circulation. It was the first and only openly declared financial war against the United States.

    As the hydra finally succumbed, a booming prosperity quickly broke out on a scale not previously imagined. The promise of America was finally fulfilled. The Industrial Revolution was born.

    Until... as Otto von Bismark aptly stated, the Death of Christendom was brought about by the central banks of Europe, as they were forced to pool their resources to shackle a booming America.

    ReplyDelete
  9. Thanks, FDR, for your response to my earlier post about Andrew Jackson. How do the Civil War and "panics" of 1857, 1873, and 1893 fit into this framework?

    ReplyDelete
  10. "Thanks, FDR, for your response to my earlier post about Andrew Jackson. How do the Civil War and "panics" of 1857, 1873, and 1893 fit into this framework?"

    Great Question. A good start is to follow the money:

    http://fdralloveragain.blogspot.com/2009/01/follow-money.html

    http://fdralloveragain.blogspot.com/2009/01/follow-money-part-2.html

    http://fdralloveragain.blogspot.com/2009/01/follow-money-part-3.html

    Your question deserves more of an answer than that. Maybe someday I'll sit down and bang out a discussion the American Civil War thru the 1913 FRA. It was quite a troubled time in our national history, presidents were dropping like flies, and I don't think it is taught properly in public indoctrination--I mean--school, if addressed at all.

    ReplyDelete
  11. Thank you, FDR. I look forward to it.

    (Andrew Jackson poster).

    ReplyDelete
  12. nathan, i just found your blog yesterday, followed a link from karl denninger's message board, and i am digging your work.

    but (sorry to be so rude in my initial post with a 'but')
    you wrote "in 1932 life seemed normal…"

    really? everything was peachy until march of '33 when fdr wrecked the economy?

    hey, i agree with everything else you said today. sorry to be picky. 'mister we could use a man like andrew jackson today'

    ReplyDelete
  13. (sorry, you're not named nathan. got you confused with another blogger. but everything else i wrote is correct. i think.)

    ReplyDelete
  14. hi howard,

    instead of forgiving our grand/great parent's loans when a nation was in crisis, they passed the bill to us.

    ReplyDelete
  15. hey, that is nothing compared to the bill we are passing on to our posterity.

    don't get me wrong. i agree that fdr did plenty of damamge, to that generation as well as laying the foundation for the demise of the economic and political systems we are enjoying today.

    just making the point the new deal took us from bad to worse, not from normal times to worse, as that line in the blog post indicates.

    and a theme that i see recurring in history. hoover intervened in the economy quite a bit. the government mucking around in the system began w/hoover, and continued, on a much grander scale w/fdr.

    from one angle, i see a lot of similarity with the continuities of bush/paulson through obama/geithner. to infinity; and beyond!

    ReplyDelete
  16. Until... as Otto von Bismark aptly stated, the Death of Christendom was brought about by the central banks of Europe, as they were forced to pool their resources to shackle a booming America.

    Bismark's comments were in reference to Abraham Lincoln, not Jackson.

    ReplyDelete

The USA's political-economc system is best described as:

On Nov 2, 2010, I plan to vote (FOR or AGAINST) my incumbent congressman

 
Free Hit Counter