Bailout Mistake!

I thought it would be interesting to reprint some of the articles I wrote in the eighties for a hard-copy newsletter I published at the time, The Tortoise Report. And I’d like to begin with a poem that I first presented live at the NCMR Conference in New Orleans in 1984. If you change out some of the names and cultural references, I think you’ll agree that it could well have been written in the year 2008.

It never got me anointed poet laureate, but it did get a lot of laughs at the conference. Enjoy.

Twas the early 1980s,
And all through the land,
Everyone panicked
And sold his last Krugerrand.

Clearly unstoppable
Were the deflationist forces,
As the big banks collapsed,
Like Paul Samuelson’s courses.

As inflation tumbled
Almost to zero,
Reagan sat back
And fiddled like Nero.

His buddy Reagan said,
Deficits don’t matter.
We’ll keep borrowing money
And get even fatter.

The masses cheered
At the endless prosperity;
There was no end
To Big Brother’s charity.

Many of us yelled,
Enough is enough.
You’re totally wrong,
This is not the right stuff.

But the masses jeered

And called us doomsayers;
They said,  Keep the faith,
Just say your prayers.

Can’t you see
It’s under control?
Inflation’s dead.
We read the poll.

Even John Kenneth Galbraith
Turned up his nose,
But you can’t trust a guy
Who wears pantyhose.

Then a funny thing happened
On the way to deflation:
Someone yelled,
Inflation! Inflation!

The money supply
Is out of control.
To the Federal Reserve,
We’ve sold our soul.

All the politicians
Had tons of advice,
But they sounded a lot
Like a bunch of blind mice.

Down with the rich,
Shouted Gary Hart.
It was quickly apparent
He wasn’t too smart.

John Glenn stepped forth
Like a liberal buffoon,
But he’d have done better
Had he stayed on the moon.

Then Jesse Jackson
Acted with pomp,
But he was just a guy on
Unemployment comp.

Geraldine Ferraro
Said she could do it,
But she was a joke,
And everyone knew it.

President Reagan,
Now he was no sap.
He said, “Leave me alone
Till I finish my nap.

But when Reagan awoke,
He called in his men,
Whose combined IQs
Totaled just over ten.

Now Reagan was nimble,
And Reagan was quick.
He never was fooled

By a Bolshevik.Men,” said the president,
“The country’s worth saving.
Let’s put in a call to
Volcker Printing and Engraving.

Volcker came to the phone
And sounded distressed,
But on hearing the plan,
He pounded his chest.

This is a great way
For me to get high.
For the job you need,
You’ve called the right guy.

A tightening of credit
Is what I’ll hint,
While I’m telling my boys
To PRINT, PRINT, PRINT!

Out of everyone’s pockets,
Dollars came pouring,
And before you knew it
Prices were soaring.

Eight dollars or more
For a jar of jam,
And ten or twelve dollars
For green eggs and ham.

The deflationists shouted,
“How can this be?
We had it all figured,
From A to Z.

The masses soon realized
That it was too late.
There was no way out
Of their terrible fate.

And from that point on,
As everyone knows,
Morals were out,
It was anything goes.

People hoarded hard assets
And hid them away,
And in their panic,
You’d hear them say:

They’ll come for our gold,
Those government wimps,
Instead of cracking down
On rapists and pimps.

All of Reagan’s women
And all of his men
Couldn’t put the economy
Together again.

But the story, alas,
Has a happy ending,
And that’s the message
That I’m sending.

To the delight of the wise,
When inflation was done,
Those in the know
Had made a ton.

The moral?
It’s really not hard to see:
Paper money’s
As fake as can be.

And so it finally
Came to pass
That men used the dollar
To wipe their gold coins.

I wonder how this will read in the year 2032? Stay alive! and stay tuned.

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Copyright C 2009 Robert J. Ringer

Robert Ringer is the author of three #1 bestselling books, two of which have been named by The New York Times among the 15 biggest-selling motivational books of all time. You can sign up for a free subscription to his e-letter – A Voice of Sanity in an Insane World – by visiting www.robertringer.com.

Also check out the Liberty Education Interview Series at A Voice of Sanity podcast.

In Part I of this article, I discussed how the creation of surplus wealth leads to an increase in manufacturing plants and equipment, which in turn leads to the creation of both new jobs and new products. This stimulates economic growth and, in general, improves the well being of people who work for a living.

But what if businesses don

Compared to the cast of characters being appointed to high-level posts in Washington, Rod Blagojevich is starting to look appealing. The guy reeks with vintage Chicago chutzpah, he’s got style (What can you say about a spandex jogging outfit?), and he’s entertaining.

In fact, had B.O. appointed him Secretary of the Treasury, I think he would have added some much needed panache to the otherwise drab Obamastration. I challenge you to name anyone who has a better nose for money than Blago. He’s forgotten more about it than Ben Bernanke will ever know.

But, alas, it was not to be. Blago is far too busy talking to Geraldo and the Obama Bitches on The View. So, I guess it’s up to us common folks – the ones who are, in effect, coming up with the money to bail out Wall Street and the big banks – to figure out what Obama’s up to with his “stimulus package.”

And a good place to begin is with economics. Economics is defined by one dictionary as “the science that deals with the production, distribution, and consumption of wealth (goods and services).” Simple translation: Economics is the study of how people get the things they want.

By “the things they want,” I am referring to material things. Economics does not deal with love, religion, ethics, philosophy, or emotional issues. These and many other “things” may be important to most people, but they simply have no place in the science of economics.

What economists call “wealth” is food, clothing, TV sets, automobiles, and other products that people desire. Money itself is not wealth. Money is just a medium of exchange. To a businessman, wealth also may consist of factories and equipment, things that can be used to produce products and services that consumers want.

What stimulates real economic growth – i.e., the production of wealth – is action on the part of individuals trying to improve their own well being by obtaining what they desire on a voluntary-exchange basis. It is unfortunate that this bothers some people so much that they attempt to interfere with this natural process. What is even more unfortunate is that many of them are economists who are advocates of the strong arm of government as the most effective way to do it.

When such interference occurs, one of the basic laws of economics – the law of supply and demand – is violated. It is this law that establishes a logical and honest relationship among prices, wages, and costs. If, for example, prices go up, that causes demand to drop … which, in turn, causes employees to be laid off … which, in turn, causes wages to go down … which, in turn, causes fewer goods to be produced.

On the other hand, if natural conditions create an excess supply of goods in the marketplace, those goods will then be offered at a lower price. That, in turn, increases demand … which, in turn, pushes prices back up … which, in turn, attracts more entrepreneurs to that particular industry … which, in turn, leads to higher wages and more employees … and on and on the cycle goes. Unless, of course, government intervenes to stop the natural flow of the market – which is what it is doing as I write this, and what it is promising to do even more in the future.

What is good about the creation of an excess supply of goods in the marketplace is that it leads to an increase in plants and equipment, which, in turn, leads to the creation of both new jobs and new products. The sale of these products to consumers leads, hopefully, to profits – and a large percentage of those profits are then reinvested in still more plants and equipment or in research and development. Thus, economic growth continues and the well being of those who are willing to work is improved.

But what if profits are not reinvested? Good question, and one that I will address in Part II of this article.

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Copyright C 2009 Robert J. Ringer

Robert Ringer is the author of three #1 bestselling books, two of which have been named by The New York Times among the 15 biggest-selling motivational books of all time. You can sign up for a free subscription to his e-letter – A Voice of Sanity in an Insane World – by visiting www.robertringer.com.

Also check out the Liberty Education Interview Series at A Voice of Sanity podcast.