It was a rotten year, politically speaking. It didn’t start out so badly; I was not unhappy about Obama’s election. The Republicans had abandoned all principle, and I could feel, and share, the excitement of AfricanAmericans as Obama’s victory neared. But then, I didn’t think his policies would be as awful as they have been – one reckless government takeover program after another, aided by his minions, Nancy Pelosi and Harry Reid.
Economically, it was a rotten year too, and the rottenness is conjoint. It will only get worse if the magicians in Washington pull off more rabbit tricks, with their “stimulus,” bailouts, card-check, healthcare revamps, cap-and-trade, and more.
The modest rise in the stock market reminds me of the market’s rebound 80 years ago. In August 1930, the Dow Jones average came close to what it had been in early 1929. But then the economy was battered by New Deal programs, from killing piglets to forcing the “public option” of electric power. (The piglets were killed to prop up farm prices; today’s $8,000 tax credit for supposedly first-time homebuyers is a tax payer funded way of propping up housing prices.)
Superficially, things today are different from the 1930s, because Ben Bernanke “learned the lesson” that the Federal Reserve created the Great Depression through lack of liquidity. Now he is pouring money into the system to “restore” liquidity. But who in his right mind will invest in an economy being strangled by inflation and high taxes?
We haven’t seen the inflation yetI and we can keep hoping that somehow it won’t materialize – that, for some reason, the vast rivers of printing-press money won’t flood the currency. But the price of gold keeps going up. In media speak (here’s a passage from the Associated Press), that’s because “hopes for an improving economy fed a broader rally in commodities.” Gold is just another commodity? No. Even my stock adviser, who brilliantly invested in blue chips for more than 40 years, is recommending”some” gold. And he’s a Democrat.
