Hamilton Speaks

Reader comment on: The Postwar Boom

Submitted by Risk Averse Alert Blog (United States), Jun 21, 2012 17:31

Yet to ignore massive investments in the physical economy occurring for ten years prior to 1944, many projects financed by the Reconstruction Finance Corporation -- the TARP of its day put in place by Hoover following the 1929 Crash and transfromed into a virtual Hamiltonian national bank by FDR -- would be a fatal error in contemplating the Hoover Institution's analysis you cited. In constant dollar terms, the nation's investment deficit today by comparison sets up for pure misery were a linear extrapolation made now, suggesting by simply cutting government outlays all will be well. Far from it. Per the matters of "insuring domestic Tranquility" and "promoting the general Welfare" -- the likes of which the U.S. government in fact is charged to secure -- only a further departure from achieving these mandates (and others) extending what is an increasingly socially problematic trend develping over the past 40 years since Nixon destroyed the Bretton Woods system would be the more likely outcome now with the physical economy decimated, the financial system loaded to the gills with an unprecedented volume of insolvent garbage, and intellectually bankrupt monetarists committed to a Wiemar Germany-like hyperinflationary blowout venturing to pretend a criminal lack of regulatory oversight in the Greenspan era somehow can escape condemnation.

And why does no one question how the Greenspan-blessed securitization Ponzi scheme giving birth to the now hopelessly insolvent shadow banking system (while it was working "swimmingly" prior to its 2007-2008 collapse) verily encouraged debtors both public and private to float increasing volumes of debt, this as interest rates were being more or less artificially driven down by what ultimately is proving an unsustainable [Ponzi] arrangement? Therein lies today's Great Vulnerability to the trans-Atlantic banking system, for when bond market confidence collapses in the face of more and more debt joining the insolvency parade and interest rates inexorably rise, you can kiss the world as you know it goodbye. The screams of government to "do something!" will become defeaning.

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