Obama Making Same Mistakes That Led to Great Depression
Lipsky: Obama Making Same Mistakes That Led to Great Depression
Wednesday, 26 Oct 2011 02:20 PM
By Forrest Jones and Kathleen Walter
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The United States is in danger of a long recession because President Barack Obama is making the same errors as those that led to the Great Depression, journalist and author Seth Lipsky told Newsmax.TV in an exclusive interview.
Lipsky, founder and editor of the New York Sun and a former Wall Street Journal reporter, also says the country needs to reform its monetary system and return to constitutional money based on gold and silver.
He explains that fiscal and monetary policies have seriously weakened the dollar over the last decade, and now it's up to Congress to do push through meaningful reforms to stop it.
In fact, it's a constitutional requirement for Congress to act, said Lipsky, who wrote many of the New York Sun editorials featured in the new book 'It Shines for All': The Gold Standard Editorials of The New York Sun.
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The founding fathers named the U.S. currency after a coin called a Spanish-milled dollar, which represented 371.25 grains of pure silver, and put protecting its value in the hands of Congress.
"They meant the dollar to be a measure of value and in fact they gave Congress the power to coin money and regulate the value thereof in the same sentence of the Constitution in which they gave Congress the power to fix the standards of weights and measures," Lipsky told Newsmax.TV.
"What the reform movement that we have been covering in The Sun wants Congress to do is to step up to that Constitutional responsibility to establish a proper value to the dollar, and then we wouldn't have to worry about inflation and rising prices," he said.
"We would have to conduct the government's budgetary operations in a way that didn't result in a collapse in the value of our currency," said Lipsky.
Under President Obama, the White House has enacted stimulus measures to incentivize job creation while the Federal Reserve has flooded the economy with money and swollen its balance sheet in an effort to spur growth and hiring.
Critics say such policies are not helping the economy and point out that unemployment rates refuse to dip below their current levels of around 9.1 percent while inflation pressures and other harmful side effects of such loose policies are becoming more threatening.
Lipsky points out that bad economic policies aren't new: they threw the country into the Great Depression, including policies carried out by both Presidents Hoover and Roosevelt.
"The Smoot-Hawley Tariffs, protectionism, tax increases, attacking capital — meaning rich people — in the courts and through regulations, the creation of a climate of uncertainty ... these things added up to the create the Great Depression.
History may be out to repeat itself.
"It seems to me, just as a newspaper editor, that President Obama is going down the list as if he wanted to repeat these errors one by one," Lipsky says.
Whether the country is emerging from a recession or stuck in a depression is up to economists to determine, but either way, better days are far from just around the corner.
"Until correct policies are put in place, I think there's a danger of a very long recession and a very long period in which our economy just isn't creating the jobs and growing the way it should be. How one defines that, as whether it is a recession or a depression, is for the economist to do."
Until then, Congress might have to act.
"The last time we were able to conquer inflation, President Reagan did the budgetary part of it and the freeing up of the economy from regulation and high taxes, and Paul Volcker did the monetary part of it by targeting prices," Lipsky says, referring to former Fed Chairman Volcker.
"There is a sense now that Congress is going to have to step in and do a monetary reform itself, and several of the Republican candidates are now starting to talk about this, something the New York Sun has columned in half a dozen editorials in the last couple of years."
The right thing to do would include a return to a gold standard of some sort, which ties the value of the dollar to gold.
"We need to reform our monetary system and return to constitutional money based on gold and silver," Lipsky says.
Supporters say the gold standard would prevent the government from spending beyond its means and would do away with extremely loose monetary policies
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