There are a lot of theories about what caused the current recession. The prevailing theory, unfortunately, is that the sole cause of the recession is that businesses were deregulated, left to their own devices, and ended up destroying themselves.
This is wrong.
This video explains why the housing bubble would not have happened if it weren't for the Federal Reserve.
This lecture is presented by Tom Woods, author of the NYT Bestseller "Meltdown." He does a really good job of making it fun and understandable for people who aren't familiar with economic terminology.
This is more of a political take on why we're on the path towards a collapse in the dollar.
UPDATE: More technical data available here... looks like this video is going to need updating pretty soon.
Rough Transcript:
[cycle through lbt faces]In my last video, I outlined why it is that so many libertarian-minded people believe the dollar is headed towards collapse.
If you're new to this subject, it's natural to assume that we're all exaggerating, and are probably overstating the problem in order to scare people for our own personal gain--whether it be for votes [rp], money [ps], or youtube popularity [me].
[thumbs up]This level of cynicism is perfectly healthy. In fact, anytime anybody is [al gore] trying to convince you that the sky is falling, it's probably a good idea to assume that they're full of it, because most of the time, you'd be correct.
[7mike moore] There is money to be made and [8george bush] power to be gained out of fear. Anyone who believes everything they're spoon-fed by a person or political party [9picture of idiots1] is probably an idiot.[10picture of idiots2] Regardless of who your idles might be, they're human after all, so always keep that in mind.
[11clear]That said, there are plenty of reasons to believe we're on the path towards a collapse in the dollar. Most of them are historical.
[12 stop collapse]First of all, there is only one way to avoid a collapse in our currency, and that's to stop printing money. [13 stop collapse2]This sounds simple enough, but as I explained in my last video, to do this you must balance the budget. There are only 2 things you can do to balance the budget. [14 stop collapse3] You either have to increase taxes, reduce government spending, or some combination of both.
[15 deficit]If you know your history, you know that only time our budget has been balanced within the past 40 years was a brief period that occurred a decade ago unde r president Clinton. Many believe that even this tiny blip of fiscal sanity was actually an accident.
[erase 16,17]
[18 - spending] As you can see from this graph, never in his 8 years of office did clinton EVER reduce government spending. The reason the budget became balanced was in a small part due to an increase in individual income taxes, but mostly due to an UNEXPECTED increase in tax revenues due to the boom and bubble in our economy occurring at the time.
[19 stop collapse3]A boom like that of the late 1990's is extremely unlikely to occur within the next few decades. In addition, raising taxes in the foreseeable future would have a devastating effect on the our already beleaguered economy. This would lead, paradoxically to even less revenue. [20 stop collapse3 - no taxes]Therefore, the only option that remains is to dramatically reduce government spending and to pay down the national debt. This is where the trouble begins.
[21 spending]Government spending has risen, in real terms, almost every year for the past 60 years. Obama has promised to cut the 2010 budget from its all-time high in 2009,[22 New Deficit] but if you exclude 2009, his budget projection still requires a deficit three times as big as the record set by President Bush.
[23 Budget 1]Obviously the bailouts were to blame for most of the spending increases in 2009, but when you look at the 2008 budget, you can clearly see that our problems will not end when the bailouts do. The budget is still far too large and the debt grows larger every day. Many believe that simply pulling out of Iraq would solve the budget shortfall. The problem is that the numbers just don't add up.
[24 Budget 2]Even if you took out Iraq spending, the deficit still remains.
[25 - New Revenue] On top of all that, the tax revenue for 2009 going forward is going to be much lower. This would require an even GREATER reduction in spending to balance the budget.[26 - New Debt] When you factor in the bailouts, things get even worse. Even by extremely conservative estimates, like this one provided by the government itself, our debt will overtake our GDP in less than 2 decades.
[26 Question mark] So what do YOU think? Does it look like we're doing anything about our currency situation? Based on the horrible track record of our politicians, is there anything out there to suggest we're taking care of this? Would any of our politicians risk losing an election in a futile attempt to persuade congress to save our currency? What if the necessary spending cuts are in medicare or social security? Coming out in favor of cutting either of those programs is practically a death sentence to politician's career.
[1 lbt]With all that in mind, do the warnings of hyperinflation and collapse in the dollar seem all that far-fetched? Do you really believe the republicans and democrats in power are going to recognize and do what is necessary? (101,155)
I was testing out my new condenser mic setup and got carried away. Sorry about the volume level, I'm still figuring it out. Logo at the end by DeadcowX.
Transcript (roughly): People like Ron Paul are constantly lamenting the good ol' days when America was on the gold standard. The reason for this is not that gold is pretty or magical or any better than counterfeit-resistant pieces of paper; the reason is simply that no matter how much they may want to, government cannot create any more gold to pay its bills.
Of course, if we could trust our government not to abuse the privilege, there would be no need to rely on the finite nature of atoms to keep the purchasing power of our currency constant.
Though the United States had been shying away from the gold standard since the early 1900's, it wasn't until 1971 that President Nixon took us completely off the gold standard. This basically meant the government was now given free reign over the purchasing power of our currency. Let's take a look at the result of that experiment.
As self-granted government powers to print money have expanded, so too have the money supply.
You may also notice something happening at around 1922: this is the year the federal reserve started participating in open market operations. Seven years later, in 1929, America experienced the infamous black friday stock market crash, which was followed by the worst depression in its history.
Supporters of the gold standard do not see this as coincidence, and in fact blame the federal reserve for accentuating the natural booms and busts of the market by manipulating interest rates (78,801)
You hear people like Ron Paul constantly moaning about the good ol' days when we had a gold standard. The reason for this is not that gold is pretty or magical or any better than counterfeit-resistant pieces of paper; the reason is simply that no matter how much they may want to, government cannot create any more gold.
Of course, if we could trust our government, there would be no need to rely on the finite nature of atoms to keep the purchasing power of our currency constant.
Though the United States had been shying away from the gold standard since the early 1900's, it wasn't until 1971 that Nixon took us completely off it. This basically meant the government was now given free reign over the purchasing power of our currency. Let's take a look at the result of that experiment:
Presidential candidatin' time once again, and for some people, it's time to ignore what actually matters and pick the dumbest issue possible to vote on.
In 2000, it was re-introduction of Pogs as a national trend. In 2004, it was gay marriage.
Now, it seems to be the economy. Except not. No it's about Change... no wait, it's about Hope!
That's it, hope!
Can you tactilely feel hope? Can you unfold some hope from your wallet and buy bread when it costs $40 a loaf?
As we're seeing, people chosen to head government agencies like "The Fed" have a bigger impact on your life than your perception of the president.
Unfortunately, that will have no bearing WHATSOEVER on who is elected in November.
Let's do a summary of economic policy from the 2 (3? No) frontrunners:
Obama's economic policy (at least, from his website) is an unending litany of nonsensical and mostly nonspecific populist cliches and exploitation of common economic misconceptions. It's kind of like a checklist of stereotypical democratic voting blocks.
I'm not going to go through all of it. Just bring it to any econ professor who's a fan of monetarism (PS, Alan Greenspan's a monetarist). Bring tissues, it'll be emotional.
Meanwhile, you have McCain who will probably soil his adult diapers and have a stroke in an inhuman surge of glee and vomit if he ever gets elected. Mainly I see him as retaining the Bush policy for the most part but I don't see the budget expanding by as much. This would mean four more years of stupidity and keyensian tomfoolery.
Hillary's out so I'm not going to bother looking up her stated views on the subject. Not like it'd matter anyway, as it's probably a lot of BS.
Neither candidate will balance the budget. Neither will fix the Fed.
What matters more than the president is going to be the people he puts in his cabinet, especially in the treasury and federal reserve. The current people (Bernanke, Paulson) are like a couple of 10 year olds trying to salvage a pot of spaghetti sauce they just drowned a cat in. Since it's pretty much a crap shoot, and hard for either of these idiots to be worse than it already is, I simply don't care.
If you need me November 4th, I'll be at the bar. (16,557)
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