Federal Reserve Chairman Ben Bernanke recently appeared before the House Budget Committee and acknowledged that the economy is being battered by an unusual and unsettling combination of problems, and that growth will probably be slower in 2008 than last year. He stated that whatever action Congress takes should be designed as a quick jolt to revive a languishing economy, and that measures like spending on infrastructure or long-term tax relief should be avoided. As the White House and Congress considered "an economic stimulus package" that could cost upward of $100 billion to $150 billion, Bernanke said any such package should be "explicitly temporary."
What no one in the mainstream press will ask is: When most of our economic problems are attributable to too much government spending, how can anyone believe that spending an additional $100 billion to $150 billion (probably more) will help our economy?
When much of the instability in our housing markets can be traced to economic "bubbles" created several years ago when the Fed held interest rates artificially low, why does anyone think the Fed can come to our rescue?
And when Americans already have a low rate of personal savings and a correspondingly high rate of personal debt, why would anyone think that enticing Americans to "spend more" would be the best way to strengthen our economy?
The answers to these and similar questions can only be determined if Americans abandon the false concept that was promoted in the early 1930s that it is somehow government's responsibility to manage the economy. The long-term answer to our economic woes is to heed the advice of the Austrian school of economics (represented by Ludwig von Mises and Friedrich von Hayek) and abolish the Federal Reserve. Accompanied by a return to a monetary system that is backed by precious metals, a vast reduction in government spending and a balanced budget, economic stability would be restored.
In the current stable of presidential candidates, there is only one candidate who has a grasp of economics and that is Republican candidate Ron Paul. When the Federal Reserve drove interest rates down in the wake of 9-11 and caused malinvestments to be made that are only now being revealed, Paul predicted the current mortgage meltdown.
Government bailouts will not cure our ills.
Only a return to a non-interventionalist foreign policy, fiscal restraint and sound money will restore confidence in our economic system.
Robert J. Schlereth