See yourself what others offer in like regard:
Politicians and pundits take up where Whirlpool, General Electric, and Maytag have left off, spinning an event or circumstance into something new and often unexpected. And it's not just events -- entire national moods and belief structures have been recast or spun anew. [cxiii]
The integrity of our leaders, our ability to trust that they understand what we are confronting -- or, for that matter, that they are telling us the truth about it -- is leaching away. Why should we believe what they say about the war on terror, the safety of our food, the global financial crisis, or any of the dozens of essential issues when, over and over, their policies endanger us? [cxiv]
As concerns our Federal executive branch of government, let’s take a brief look at our Presidents over the most recent years to understand better how we got into our current economic mess and strayed so far from the fine values and leadership of America’s founding fathers - and the chilling mandate of Teddy Roosevelt. And as you are thinking about all of this, let's begin.
Lyndon Baines Johnson ( Nov. 22, 1963 – 1969)
With his “Great Society” legislation, President Johnson (LBJ) added the Medicare and Medicaid Entitlements. These Entitlements, like Social Security, are socialistic programs that run counter to “free markets.” As you can imagine, they drain America financially, too.
In 1963, when Lyndon Johnson replaced the assassinated Kennedy, business activity was just beginning to accelerate. With the tax cut of 1964 increasing capital expansion in business, consumer spending, and the growth in state and local government for Johnson's Great Society public welfare programs, the nation's economy was showing the first signs of financial instability. [cxv]
The Great Society was merely the domestic wing of America’s new system of imperial finance. Johnson offered more bread and more circuses than any president before him…. The scope of the Great Society was massive, comparable to Franklin Roosevelt’s New Deal programs but on a more expensive scale. Even counting only Medicaid and Medicare, the LBJ idea has added trillions to future obligations. [cxvi]
To these new and costly entitlements, LBJ escalated America’s war with Vietnam, a “foreign war”, to its peak in 1968. As most wars, it was another monumental financial undertaking – and a natural extension of the US Empire.
We had no concrete idea how much Vietnam was going to cost. First, I think fundamentally it would be under estimated to begin with. And, second, some of the estimates were somehow or another not getting across the Potomac from the Pentagon to the Executive Office Building, at least not to the Council’s part of the Executive Office Building. Anyway, the Council was operating partially in the dark. [cxvii]
LBJ's total Deficit in 5 years was $44.8 billion.
Total accumulated Debt was just under $59 billion.
The lasting legacies of Johnson's five years in the White House are these: He adopted and promoted the dangerous idea that deficit spending by the Federal government is okay even when the survival of the nation isn’t at stake. And he created a plethora of social entitlement programs that have now, a quarter-century later, left the government politically unable, or at least unwilling, to control its pandering and thus nearly 65% of its annual budget after interest payments. [cxviii]
Richard Milhouse Nixon (1969 - August 9, 1974)
President Nixon initially escalated the Vietnam War with incursions into other nations, and then ended it.
He removed the US dollar from the gold standard.
In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. [cxix]
In August 1971, President Nixon faced an ever array of economic woes and a corresponding outward flow of gold as anxious nonresidents and foreign central banks cashed in their dollars. He decreed that American currency could no longer be exchanged into the yellow metal. In one fell swoop, the greenback was transformed from a store of value into nothing more than a promise, a piece of paper with ink on it. As such, it was an obligation that few governments with printing presses at their disposal - or their equivalent – would ever honor in full. [cxx]
On August 15, 1971, the administration of Richard Milhouse Nixon did something extraordinary. It slammed the “gold window” shut. Henceforth, foreign governments would not be able to redeem their surplus US dollars for gold…. What was their crime? Breach of contract? Theft? Fraud? Counterfeiting? It was all these things. They breached the solemn promise of five generations of US Treasury officials and set in motion the worldwide credit bubble of the pax dollarium age. [cxxi]
Nixon’s Vice President Spiro Agnew was forced to resign in 1973 after pleading no contest in Federal court to charges of income tax evasion and bribery.
The following year Nixon quit as President rather than face certain impeachment by the Senate for the Watergate break-in.
His total Deficit in his 6 years was $67.0 billion.
Total accumulated Debt was just over $124 billion.
In 1973, Richard Nixon had implemented so-called revenue-sharing through which $30 billion was returned to the states to use as they saw fit. But by the first decades of the new century, the states were insatiable in their demands for Washington to pick up huge medical care costs, which soon bulked large in the forecast for ballooning Federal budget deficits in the 2010s and 2020s. [cxxii]
Gerald Rudolph Ford, Jr. (August 9, 1974-1977)
With the country in recession, President Ford decided to use government spending, i.e. spending more money than taxes brought in, so this money would ultimately be in the hands of consumers and businesses; thus, helping to resolve America's economic problems.
Perhaps it was his [Ford] years in Congress that insulated him from a sound fiscal approach…. In 1974, he [Ford] asked for and got a partial tax rebate from Congress; the following year he got a tax cut. Cutting taxes while spending increased led, of course, to higher deficits. It also watered the inflation seed that Lyndon Johnson had planted. The sorry result of Ford's fiscal policies was that he saddled the country with $126.9 billion in budget deficits after less than three years in office. [cxxiii]
His total Deficit in his 2 years was $126.9 billion.
Total accumulated Debt was just over $226 billion.
Neither Nixon nor Ford had the political courage to swallow the bitter pill that would have worked: reducing government spending and creating a balanced budget. To do that, they would have had to cut entitlement programs or make big reductions in defense. They wouldn't do it either, so inflation kept galloping along. [cxxiv]
James Earl Carter, Jr. (1977-1981)
With a growing unemployment problem from both women and Boomers coming into the marketplace, coupled by inflation, President Carter made a decision to tackle unemployment. As you might imagine, Carter's efforts incurred still more and larger deficits.
The Carter era marked a series of seemingly irrational programs that alternately expanded and contracted the economy, eventually producing unprecedented inflation, huge trade deficits, a deteriorating dollar, high oil prices, and, ultimately, worldwide economic chaos. [cxxv]
Entitlement benefits, including Social Security, were enhanced by having them indexed to the inflation rate.
Interest rates soared to 21% a year.
Double-digit inflation is a terrible thing - and it got up to 14 or 15 percent on a monthly basis for a while, shortly after I became chairman of the Fed…. It was the biggest inflation and the most sustained inflation that the United States had ever had. [cxxvi]
His total Deficit in 4 years was $226.9 billion.
Total accumulated Debt was just over $3 trillion.
Carter… set new records during his term for total annual budget deficits and for growth in the national debt. During the Carter presidency, the government overspent its revenues by over $227 billion. That was more than all the deficits piled up during World War II. [cxxvii]
Ronald Wilson Reagan ( 19
81-1989)
Declaring himself a conservative, President Reagan advocated reduced business regulation and government through what became known as “Reaganomics.” To his credit, Reagan dismantled many socialistic policies since the Great Depression including a sharp decrease in US unions. Unfortunately, tackling the socialistic entitlements was too hot politically on both sides of the aisle even to consider.
Margaret Thatcher and Ronald Reagan have led the way back toward an economy relatively unfettered by democratic socialist policies. They have reduced government ownership and control over “the commanding heights” of their economies by privatization (in Britain) and deregulation (in the United States). These conservative governments have also removed government support for unionization…. Neither Thatcher nor Reagan has made a successful assault on the third aspect of socialism, the distribution of the social dividend to all. [cxxviii]
Reagan instituted a huge armaments build-up, while at the same declaring his intent to balance the budget. His huge Debt build-up was the opposite of “balancing the budget”, and counter to conservative values.
In 1983, Reagan sent US troops into the Caribbean island nation of Grenada in response to a military coup that overthrew and executed Grenada’s freely elected leader. 10,000 US troops overthrew the brief revolutionary, military government for a continued government of the people and by the people.
Of all the enemies of public liberty, war is perhaps the most to be dreaded, because it comprises and develops the germ of every other. [cxxix]
While Reagan felt the coup and military government was a threat to US interests and was widely supported in America, the UK, and Canada, the UN General Assembly condemned the US action “as a flagrant violation of international law.”
By the end of the Cold War, the United States was spending billions annually building and maintaining the ability to take control of the sky over any piece of earth at any time, in any weather. [cxxx]
On March 18, 1988 by Executive Order #12631, Reagan established the President’s Working Group on Financial Markets – known on Wall Street as the Plunge Protection Team (PPT). The PPT intervenes in the US stock market to prevent stock market collapses like the 508 point DJIA drop on the single day of October 19, 1987. From its founding under Reagan and with every president until the present, the PPT has expended billions and billions of tax dollars wrongly manipulating our US stock market - and mostly for political gain.
In a proclamation establishing the President’s Working Group on Financial Markets issued by Ronald Reagan on March 18, 1988, four months after the October 1987 crash, the secretary of the treasury and the chairman of the Federal Reserve Board were the designated big hitters, but others -- the several stock market chief executives, for example, and the president of the New York Federal Reserve board -- could be added to the attendees as needed. The Working Group’s purposes, as elaborated in a 1997 Washington Post article, were to enhance “the integrity, efficiency, orderliness and competitiveness of financial markets and [maintain] investor confidence.” It set up something of a war room, maintained a global as well as a national list of key contacts, and carried out simulated emergency drills. [cxxxi]
Manipulating “free markets" is counter to a free market economy; and with US stocks, it’s prohibited in the United States under Section 9(a)(2) of the Securities Exchange Act of 1934. This increased government regulation was also in direct conflict with what Reagan had campaigned for, what he stood for, and what he even embodied as the US President.
There is a belief that this team [PPT] represents a powerful and secretive hand that is ready to act anytime the Dow looks ready to tank big-time. [cxxxii]
President Reagan was confronted by the beginning of America's Second Great Depression in 1987 between the August 25 high of 2722 in the Dow Jones Industrial Average (DJIA) and the October 19 low of 1739. This dramatic decline was 36% - exactly the same cumulative percentage drop in the DJIA that occurred in October of 1929 between 11% on Black Thursday (24th), 13% on Black Monday (28th), and 12% on Black Tuesday (29th). While you'll appreciate this fact more as explained later in this book, 1987 was also exactly 54 years from the 1933 economic bottom, as cited by many economists, for the Great Depression.
Hopefully, you remember President Reagan - and fondly. Reagan seemed such a powerful leader of most presidents in my lifetime in bringing together both Republicans and Democrats for a stronger America, respected the world over. That respect is increasingly shown for him in Republican circles, at least, as can be observed with so many references to him surrounding this most recent presidential election.
So, who do you think would prove the best US President among recent leaders to lead this country through another Great Depression? Likely, and if a poll was taken, most Americans would agree on Ronald Reagan. Isn't it sad that Reagan stood in the way of our free markets by creating the PPT?
His leadership may have been needed most to lead our nation out of this Next Great Depression and at a time when the debt totals would have been much easier to overcome than today. Unfortunately, Reagan - like every president these days - did not want such a dismal economic environment to begin "on his watch."
Far worse than possibly being the first US President to set policy similar to Marxist/Communist policies, Ronald Reagan’s PPT is deceptive like the enemy of the Lord. As you know, it’s dishonest by thwarting truthful free markets. It brings to the table uneven weights and measures. It is the antithesis of Godliness in these and other respects. Sadly, Reagan, who did not trust politicians, left his PPT, so others after him continue to twist and manipulate our free markets. This subsequently harms all Americans and the generations to follow.
Reagan's total Deficit in his 8 years in office was $1.34 trillion.
Total accumulated Debt was just over $1.8 trillion.
Partially as a result of these failed social policies and the large amount of borrowing from foreigners, we went in only 10 years from being the largest creditor nation in the world to the largest debtor nation. So that's the legacy we inherited from the Gipper: an inability to operate the basic functions of government without borrowing from creditors around the world. It's a sorry state for any country to find itself in, but especially one that thinks of itself -- inaccurately now, to be sure -- as the richest on earth. [cxxxiii]
Then, along came Ronald Reagan with a message of hope, optimism, and something-for- nothing. The supply side, the Laffer Curve! Suddenly it seemed possible to spend more … and still have more! Government could cut taxes -- and get more revenue, said Laffer. Forget the deficit; it will take care of itself. Somehow. The average man figured he could do the same: borrow more, spend more, and he would get rich. [cxxxiv]
Although President Reagan made many positive, even historic contributions to American history, the tripling of the national debt that occurred during his White House tenure is certainly not among them. [cxxxv]
Few directly address themselves to the question: Is another Great Depression possible? My answer is that not only is another 1930s-style tragedy possible, it is, given the perverse social policy of the Reagan presidency, inevitable. [cxxxvi]
George Herbert Walker Bush (1989-1993)
In October of 1989, President Bush invaded Panama and deposed de facto Panamanian leader, general, and dictator Manuel Noriega and dissolved his Panamanian Defense Force to help swear into office president-elect Guillermo Endara.
In August of 1990 and upon UN authorization, the US joined with 33 other nations in successfully expelling Iraqi forces from their invasion of Kuwait which was completed in just seven months.
I abhor war and view it as the greatest scourge of mankind…. If there is one principle more deeply rooted in the mind of every American, it is that we should have nothing to do with conquest. [cxxxvii]
His total Deficit in his 4 years was $1.04 trillion. [cxxxviii]
Total accumulated Debt was just over $1.5 trillion.
The new Bush administration [had] no serious recog
nition that the United States has gone from the world’s largest creditor to the world’s largest debtor in less than a decade… [and] only token appreciation of the great imbalances in international trade. [cxxxix]
In four years in office, George [H. W.] Bush set new records for outspending government revenues …. Bush’s deficits came to nearly 80% of the deficits Reagan took a full eight years to rack up. [cxl]
William Jefferson Clinton (1993-2001)
In his first year, President Clinton sent troops to Somalia for an unsuccessful campaign. In 1995, he ordered bombers and later peacekeepers to Bosnia alongside NATO forces. Similar actions were taken alongside NATO forces in Yugoslavia in 1999. He also did bombings against Al Qaeda and Osama bin Laden with unsuccessful capture attempts in 1996, 1998, and 2000.
In the wars of the European powers in matters relating to themselves we have never taken any part, not does it comport with our policy so to do. It is only when our rights are invaded or seriously menaced that we resent injuries or make preparation for our defense. [cxli]
While Clinton seemed sincere in his desire to reduce the Deficit – an encouraging sign, his brag of budget surpluses turned out to be no more than moving monies from Social Security to improve his deficit numbers. Do you remember hearing of this smoke and mirrors? Just picture "Political Failings."
Early in 1988, Clinton began crowing about his administration that had “balanced the budget,” and in September he announced that we are now in the black…. The national debt on January 31, 1997, was $5.313 trillion. Exactly one year later on January 31, 1998, it had risen to $5.492 trillion – a one year increase of $179 billion…. So where did our supposed surplus come from? Social Security sleight-of-hand bookkeeping is mostly responsible for it, covering up about $100 billion of the deficit. [cxlii]
America's Worst Economic Depression Page 6
