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Ratchets or Yo-Yos?

In case anyone is delusional enough to believe that the pork and beans that are part of the Obama emergency stimulus plan (honest Keynesians at least recognize that such stimulus should be targeted and temporary) are actually temporary, let me remind you of a recent “emergency” where actions were taken that were sold to the American public as “temporary” just to get us through the crisis, or to avoid a worse crisis:

Let me emphasize two characteristics of this action: First, it is temporary. To put the strong, vigorous American economy into a permanent straitjacket would lock in unfairness; it would stifle the expansion of our free enterprise system. And second, while the wage-price freeze will be backed by Government sanctions, if necessary, it will not be accompanied by the establishment of a huge price control bureaucracy. I am relying on the voluntary cooperation of all Americans – each one of you: workers, employers, consumers – to make this freeze work.

Working together, we will break the back of inflation, and we will do it without the mandatory wage and price controls that crush economic and personal freedom.

The third indispensable element in building the new prosperity is closely related to creating new jobs and halting inflation. We must protect the position of the American dollar as a pillar of monetary stability around the world.

In the past 7 years, there has been an average of one international monetary crisis every year. Now who gains from these crises? Not the workingman; not the investor; not the real producers of wealth. The gainers are the international money speculators. Because they thrive on crises, they help to create them.

In recent weeks, the speculators have been waging an all-out war on the American dollar. The strength of a nation’s currency is based on the strength of that nation’s economy – and the American economy is by far the strongest in the world. Accordingly, I have directed the Secretary of the Treasury to take the action necessary to defend the dollar against the speculators.

Yep. That was President Nixon announcing a “temporary” suspension of the redemption of the dollar for gold … on August 15, 1971. The rest of the speech is delightful … same rhetoric we are getting today. Who wants to bet me that over 50% of the temporary programs in the forthcoming stimulus will still be in place 10 years hence?

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