President-elect Barack Obama said he wants lawmakers to finish work on economic stimulus legislation, including billions in new spending and tax cuts, within two weeks of his inauguration. Obama said his economic team is finishing up details of his proposal and is beginning to brief congressional leaders on the plans. Without giving details, he said the legislation would be balanced between cutting taxes for individuals and businesses and spending on government programs to rebuild the nation's infrastructure. "It's clear that we have to act and we have to act now to address this crisis and break the momentum of the recession, or the next few years could be dramatically worse," Obama said after a meeting in Washington with his economic advisers, including Treasury Secretary-designate Tim Geithner and Lawrence Summers, who Obama picked as his director of the National Economic Council. – Bloomberg
Dominant Social Theme: The US Federal government will rescue the US.
Free-Market Analysis: Gradually, ineluctably, the finger-pointing is diminishing as the reality of what is going on in America and the rest of the Western world is sinking in. There is less talk about why this regulation or that regulation created the biggest modern crisis in Western monetary history and more pontificating about what is to be done (a very mild improvement). Nonetheless, minds are obviously focused, and grasping or trying to grasp the magnitude of the problem (along, of course, with straws).
How bad is it? Well … it is so bad that what seems to pass for the current political script has been altered to include one of the only elements that might help out: lowering taxes. Of course, if taxes were to be radically reduced, from top to bottom, and especially at the top, then the tax cutting might help even more. And if the Federal Reserve money machine were shut down, that would be perhaps the best help. The result would be that real money would find its way into the hands of individuals, especially wealthy individuals, which would be directed towards what is necessary to lift up the economy.
Individual entrepreneurs know best what to do with their money. Put money in the hands of individuals in America and Europe and von Mises' great phrase, "human action" will start to unfold. It is individual humans, with an appropriate level of capital, who will create the individual engines of commerce within their own communities. A little of this may indeed occur even with the current Obama plan, though probably not enough to make digging out of the current deepening recession-depression-stagflation feasible.
What is the reluctance in realizing that economies are driven by individuals, not in aggregate by nation states? To state the obvious – that individual humans are the fundament of an economy – would be to reduce the power of the Big Men in suits that gather on the steps of expensive buildings in front of TV cameras. To state the obvious, that economies are the results of millions of decisions by individual working men and women, would be to reduce the power and importance of political and financial entities such as congresses, parliaments and central banks.
Can this ever be admitted? Apparently not now. Or not by the mainstream media. Thus, Obama, like his former political foe John McCain, is being portrayed as a corporate savior of America. His actions, his daring, his energy vision and wisdom when combined with that of the American congress will provide the lifeline that America needs. Here is another article, a very short one, on the economy and Obama's reaction to it that found its way onto the Drudge Report:
President-elect Barack Obama describes the economy as "bad and getting worse." He's been on Capitol Hill today, meeting with House and Senate leaders to talk about an economic stimulus plan. Before meeting with Senate Majority Leader Harry Reid, Obama told reporters, "We have to act and act now," in order to break what he called the "momentum of this recession." Obama earlier met with House Speaker Nancy Pelosi. He said he went to Capitol Hill ahead of his inauguration because "the people's business cannot wait." (Reuters)
One can see in the above squib that Obama is portrayed dynamically, as taking action that is desperately needed. The verbiage is military in nature: Action must be taken to break the "momentum of this recession." Also, Obama's efforts are meant to reflect the public good, whatever that is. His determination to forge ahead with a massive spending bill is based on the imperative that absent an Obama-moment, nothing else can help. Thus it is that one trim young man – who looks great in a suit and has "kind eyes" – has for hundreds of millions become the hope of illiquid Western humanity.
Thanks to the Internet, there are many millions who have broken free of the trap of believing that the Kabuki theatre of this political shadow play is somehow representative of anything serious. Free-market thinking – Austrian economics – is necessary for maturity of thought, with its emphasis on individual human action and the ineluctable majesty of operative, inviolable markets. Anyway, the bottom-line fundamentals of what is occurring should be obvious to anyone who is willing to look beyond mainstream media portrayals. It is this: Western governments are preparing to throw large amounts of government-directed cash into the economy; the result will likely be further asset bubbles along with distinctly underwhelming economic performance. Various instruments may surge from time to time as this massive spending works its way through the economy, but the only prediction one can make with any historical veracity is that gold and silver will continue to be assets of last resort and their attractiveness will probably drive up the price. Since the last thing the monetary elites want is higher precious metals prices, we'll chalk up this predictable side-effect to the law of unintended consequences.