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In his effort to out FDR FDR, Biden may out-Hoover Hoover

Posted by John Reed on

In his hamfisted, mandate- and majority-less efforts to out-FDR FDR, Biden is likely to out-Hoover Hoover.
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Hoover was a GOP Stanford Engineer, international miracle man who was assigned to several thorny messes and fixed them in the 1920s. Unfortunately, his main trick was to use a massive US government project approach. He was not involved with the building of the Panama Canal which was completed in 1914, but he used that approach to everything.
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After being elected president in 1928, he DID help start the Depression in 1930 by signing the Smoot-Hawley Tariff. Once the Depression started, he started the New Deal of Panama Canal-type government interventions although he did not call it that.
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Long story short, he got blamed for the Great Depression and its existence and persistence in 1932 elected one of the biggest Democrat majorities in US history.
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FDR made the Depression worse and prolonged it, but he lied America into believing it was all Hoover’s fault. To this day, the average American believes Hoover caused the Depression and FDR saved us from it.
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The truth is the FED caused and prolonged it by holding a tight lid on the money supply. The Fed had only existed for 20 years before FDR took office. Hoover and FDR helped cause and prolong it, but tight money supply was the main reason for the depth and duration of the Depression.
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People also think the massive federal spending on WW II bailed us out. Wrong again. It was the Fed thinking that the patriotic thing to do in WW II was to loosen the money supply for the war effort.
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This was all explained and documented by Milton Friedman and Anna Schwarz, both now deceased, in their book A Monetary History of the United States.
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A Bill McGurn column in the WSJ last month had this headline and calll-out:
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“Biden’s Spending Gives Milton Friedman the Last Laugh
“The monetarist ‘isn’t running the show anymore,’ the 46th president said in 2020. Would that he were.”
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I think it is very likely that all Biden’s massive spending which required the Fed to ignore Friedman’s warnings and Biden’s “Milton Friedman isn’t running the show anymore” will be prophetic and cause Biden to be blamed for the hyperinflation if it comes.
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Further, I have repeatedly said that hyperinflation is worse than a depression. My book on the subject is titled How to Protect Your Life Savings From Hyperinflation & Depression. But I said in the book that depression is deflation. I did not use the word “deflation” in the title because the American people do not know what deflation is and do not know that deflation was what the Depression was.
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To be sure, Reagan started the nation on the road to hyperinflation, and all presidents of each party took us farther down that road since Reagan. Look at the graph of the debt-to-GDP ration during those years. But Biden was the worst or tried to be, and it looks now like he will be the one holding the bag when the music stops.
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If so, he and his party will be the most hated President and party in modern times—Milton Friedman WILL get the last laugh.
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How long lasting will that be? Look at the Weimar Republic in Germany. They presided over the post WW I hyperinflation there. To this day, the Germans are probably the most-scared-of-inflation nation on earth in spite of those who have memories of the 1921-23 inflation having passed away. The rise of Hitler in 1933 and WW II are seen as consequences of the Weimar hyperinflation.
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Monetary policy is a Goldilocks operation. You must not print too much money—hyperinflation—but also not too little—depression or deflation. You must print the “just-right” amount that matches the growth of the economy.
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The Fed’s only responsibilities should be the
• lender of last resort to prevent bank runs and
• the independent decider of how much money to “print”
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The lender of last resort stuff was well explained in the classical theory of the lender of last resort which was mostly developed by two Englishmen in the 19th century: Henry Thornton and Walter Bagehot. To prevent runs on banks which are solvent but illiquid, the Fed must make necessary loans to them at unattractively high interest rates and backed by good collateral.
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In recent years, the Congress has dumped additional and contradictory roles on the Fed including holding down unemployment and generally managing prosperity.
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Those are NOT proper roles for the Fed. It must ONLY be the lender of last resort and it must be the Goldilocks money supply arbiter. It must resist pressure from the White House incumbent to expand the money supply to make him look good for reelection. That right there is precisely what the Fed has NOT been doing since Volcker left it.
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The politicians’ race to take us off the hyperinflation cliff appears to be heading for a climax and South Carolina Congressman James Clyburn’s anointing Biden to save the Dems from the disaster of Bernie has been itself a disaster because Biden almost overnight turned himself INTO Bernie. Biden, current Fed chair Powell, and the Progressive caucus have been a perfect storm of hyperinflation mongers. God help us.

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