“The Obama budget is nothing less than an attempt to end the ideas of Ronald Reagan.” — New York Times
Adam Smith, the father of free-market economics, once stated, “There is much ruin in a nation.” President Obama is out to prove it in his Newspeak program he calls “A New Era of Responsibility.” It should be called "A New Era of Irresponsibility."
And there’s no better proof than the stock market’s reaction to Obamanomics, which is big-government Keynesianism at its worst. Since Obama took office, the Dow is down a whooping 15% — and that’s after the huge sell off in the market in 2008 by more than 30%.
And the market has continued to drop precipitously since Obama addressed Congress and announced his obscene $3.6 trillion budget for fiscal year 2010. This budget includes:
—the largest tax increase in history, including a monstrous tax on oil & gas (cap and trade) and the repeal of the Bush tax rates on incomes higher than $200,000 for individuals and $250,000 for couples. Contrary to Obama’s claim, over 65% of tax filers in this category are small business owners and investors.
—the highest level of federal spending since 1945, from today’s 21% of GDP to a whooping 27.7%. This includes new entitlements in health care and energy.
Clearly Wall Street has spoken: Obama’s tax, spend and regulate policies are a disaster for the nation.
And sadly Obama doesn’t get it.
What should investors do? Play it conservative. Be well-diversified in global stocks. Maintain a high cash position, look for bargain opportunities, and keep squirreling away gold and silver coins.
And do not despair. It is not time to head for the hills, although some wealthy friends are talking about moving to New Zealand, or the Bahamas. (One friend of mine has already taken the extreme step of renouncing his US citizenship!)
In writing “The Big Three in Economics” (click here to order), I found that Adam Smith and his “system of natural liberty” have come under attack on many occasions by his sworn enemies Keynesians, Marxists and socialists, and has often been left for dead, but always makes a comeback.
As Adam Smith declared in his 1776 classic “The Wealth of Nations,”
“The uniform, constant, and uninterrupted effort of every man to better his condition . . . is frequently powerful enough to maintain the natural progress of things toward improvement, in spite both of the extravagance of government, and of the greatest errors of administration.”
In sum, the ideas of Adam Smith, and his modern followers, including Ronald Reagan, are far from dead. They are only in hibernation. The free-market giant will soon be awakened by our dire situation.
Hopefully pro-market forces in Congress (both Republicans and Democrats) will filibuster the Obama tax increases and budget excesses. Charities and non-profits are already up in arms about the proposed limits on tax deductions for wealthy donations for good causes.
I’m doing my part by holding the world’s largest gathering of free minds at FreedomFest, July 9-11, 2009, in Las Vegas, the focal point of liberty. For details, go to www.freedomfest.com. I hope you will join us.
I know I’m a dreamer but I’m not the only one.