The rise of Obama’s communism
By Noureddine Krichene
President Barack Obama has been far to the left among US presidents, perhaps the farthest. Although he inherited one of the wildest and financially anarchic economies caused by George W Bush’s militarism and financial disorder, President Obama, a devoted leftist, has only made the situation worse.
Recklessly, he has kept ratcheting up US debt since 2009. Seeing the vanity of debt ceilings, the left-dominated Congress decided to lift any constraint on government debt so Obama can raise it to the skies. Likewise, the US Federal Reserve has been pushing private debt to the skies. Debt, then more debt to
extinguish existing debt – and build prosperity.
The only lesson learned from the 2008 financial crisis is that no limit should exist for debt; the more debt is in default, the more debt should be issued. The Fed knows no Basle III rules or any regulation that should prevent disorderly growth of debt. This is in line with one of the oldest banking principles: debt is meant to be defaulted; debt brings prosperity, then there should be no restriction on it.
In the distant past, banks used to disappear following bankruptcies. Now, the Fed prints trillions of dollars to bail out bankrupt institutions. Hence, as long as there is no constraint on paper, there should be no constraint on debt.
The mountainous debt added by Obama is a pure waste; it is not essential for running the government and has no impact on economic and social capital. It is called a stimulus debt, to be showered on Obama’s voters, welfare recipients, unemployed workers, and so forth. Obama believes that stimulus debt brings high growth and full-employment. In like manner, the Fed has pushed fantastic new subprime debt at near-zero interest rate. As before the 2008 crisis, this new subprime debt will be a pure loss. The Fed has only contributed to fire up the price of housing, of stocks, and of basic necessities.
Obama and his communist entourage such as former Federal Reserve chairman Ben Bernanke, his recently installed successor Janet Yellen and many other statists, believe that government bureaucrats, through unlimited money printing and fiscal spending, will re-establish full-employment and high prosperity.
It is impossible to convince doctrinaires attached to Marxism and Keynesianism to change policy course. Stalin, Mao, and other communist leaders never renounced socialist ideals, despite the calamities caused by their doctrines.
Needless to say that Bangladesh, Burundi or Mauritania cannot afford to undertake Obama-Bernanke-Yellen fetish communism and become rich on paper money printing. Since no one will accept their paper currencies, these countries cannot undertake Obama’s profligacy. They wish they could. In the case of the US, Obama and his communist entourage can indulge in their Marxism and Keynesian caprices as long as the dollar continues to be accepted. The poor in vulnerable countries pays the price of Obama’s stimulus as it de-stimulates and starves the poor in Bangladesh and elsewhere.
Obama’s policies are as fallacious as the Keynesian principles on which they are based. Keynes asserted that his theory turns stones into bread. This magic did not exist during the 19th century. In fact, financial crises were too frequent both in the US and the United Kingdom. In both countries, it became admitted that the banking sector was inherently unstable and that there was no point for the government to keep dancing to the rhythm of banking crises. Governments decided that imprudent and corrupt bankers had to disappear and rejected any interference with prices and wages.
There was no Greenspan-Bernanke style re-inflation. The Bank of England had no policy indicator except its reserves in gold. It did not care about prices or employment. If its gold reserves were low, it raised its discount rate; if they became too high, it relaxed its discount rate. Under a gold standard, no country could boast of Obama-Bernanke-Yellen madness. Under such a standard, the US would lose all its gold, and would renounce its utopia. Under a dollar standard, it can go on into its utopia and tax Bangladesh and other countries as far as it wishes.
During the 19th century and before, unemployment was the concern of no government, since by definition, mass unemployment never existed in any country. Employment is a biological necessity. People have to cultivate land, build manufacture, and generate livelihood. No bird can remain in its nest and wait for food; it has to fly and seek food. Likewise, men build civilization, science, and technologies to create livelihood.
Unemployment is a pure luxury phenomenon. Mass-unemployment is a pure government creation and never exists in any free society.
The government should abolish minimum wages laws and unemployment benefits for labor hoarding by the government to disappear. No economy can function properly with US labor laws. It is an anti-human action of the government to hoard vital labor and inflict poverty. Jobs are never given; they have to be acquired through skills, mobility, and flexibility.
Ibn Khaldoun (14th century) studied Roman, Greek, and other civilizations that had disappeared. He attributed the cause to over-taxation and destruction of capital by the state. Obama’s reckless policies destroy civilization and lead to poverty and darkness. The
more Obama spends lavishly, the more he destroys capital and the more desolation he spreads.
The full-employment objective of Obama-Bernanke-Yellen is total illusion. If we consider people who receive government handouts such as food stamps, unemployment benefits, housing benefits, and forth as effective government employees, on a separate payroll and paid to do nothing, then the rate of unemployment becomes almost zero, since no one has starved yet in the US.
Millions of profiteers benefit from Obama’s wasteful spending and the Fed’s financial anarchy. Obama and the Fed only confiscate and redistribute wealth. Speculators are making mountainous free wealth; borrowers are rushing to accumulate free wealth. The Fed is printing billions of dollars for Obama to pay millions of workers to stay out of work. If this huge work force were released from Obama’s gratuities, it would have to work and create wealth.
A government should not be in power to protect any interest group, be it bankers, factory workers or farmers. It cannot prevent financial crises. As during the 19th century, it should allow the market to operate freely and let a crisis run its course. It should let inefficient institutions fail.
The government has no interest in reinforcing minimum wage laws or supporting unions. It has no interest in destroying the value of currency, forcing zero interest rates, awarding free wealth to debtors and speculators, and causing great injustice to workers and poor classes.
The Fed’s near zero interest rates have led to a negative interest rate. Subprime borrowers pay neither interest nor principal. In fact, subprime loans prior to 2008 were lost. If a borrower defaults, then the actual interest rate is minus 100%.
The US economy suffered eight years of Bush wars and financial disorders that culminated in a disastrous financial crisis and trillions of dollars in bailouts. Obama has been aggravating past disorders. If the US economy has been able to grow at a meager rate, it is only thanks to the external deficit. In fact, without the external deficit, then the rate of investment would drop dramatically, growth would be negative, and inflation would explode.
No one can predict how far Obama’s debt will rise. Similarly, no one can predict how far private debt will rise. Like Stalin, Mao, Castro, and others, Obama and his leftist entourage will never renounce communist ideals in which they strongly believe. For Obama, it is the state that owns, plans, and forces laws on the economy. The government has to manage and pay for healthcare, establish income and wealth equality. In other words, in Obama’s world, the basketball superstar Michael Jordan has to split all his wealth equally among all Obama’s unskilled voters and be contempt with a bare minimum income. That is Obama’s ideal of income equality.
President George W Bush was considered to be the worst president in the US history. The verdict has yet to come out on President Obama. However, his track record is even far more chaotic and his legacy could turn out far more disastrous than his predecessor’s.
Noureddine Krichene is an economist with a PhD from UCLA.
Scott McArthur · Top Commenter · Mr. Get it done at Battat
If this is representative of the quality of thought that the economics departments of the world are producing today, then we have truly entered a Dark Age of Economics with the policy disasters that are sure to follow. The banks should have been liquidated and not bailed out, but this was not done because is was considered too “communists” and would result in a loss to “capital”. To pretend that government is the problem is to misunderstand not only how government works but reality itself,
Reply · Like · Follow Post · Edited · February 25 at 3:38pm
You are wrong. Government ruins everything it touches. You are just another soft-headed statist.
Peter Bill · Follow · Silver City, New Mexico
This article is awful, and unworthy of Atimes generally excellent coverage! Obama is a center right president. the notion that the weak tea keynesiasm of big O is somehow leftist is laughable, and only the bathetic bankers and Barry Madoffs who run wall street believe it…
Reply · 2 · Like · Follow Post · February 25 at 11:55am
Marton Radkai · Works at Self employed
Where did the Atimes dig up this bullshit machine? It must be a mistake. Controversial opinions are one thing, this is just absurd stuff. Throw it to Fox News, but don’t pollute your pages with it.
Reply · 1 · Like · Follow Post · Yesterday at 3:32pm
Peter Moritz · University of Kassel
It is discouraging to read someone who apparently has no idea of the theory of “communism” spout utter nonsense using well worn catch phrases. An article really not worthy ATOL
Reply · 1 · Like · Follow Post · Yesterday at 1:51pm
Jim Tuvell · Top Commenter · Tremont City, Ohio
I’m not going to bother reading past the first couple of paragraphs. If this is satire, perhaps you could give us some advance warning.