All relationships hit rough patches. There is no better proof of this than in our schools. One day the happy young couple is oblivious to the rest of the world as they are lost in each other’s loving gaze. By the next day, usually after the boy has done something stupid, all bets are off on whether the relationship was ever meant to be. Yelling, screaming, and a blatant rejection of the boy’s physical advance are telltale signs that there is “trouble in paradise.” Unfortunately, it seems the United States is playing the part of the boy in a similar scenario with its economic partners.
It is no secret that the Federal Reserve and/or the Treasury Department has printed or committed over $12 trillion to “stimulate” the economy. Of course, no one should expect that the government is done with its spending binge. All signs point to more massive expenditures, albeit in more creative ways, in the future. Janet Yellen, president of the San Francisco Fed and a voting member of the U.S. central bank's policy-setting Federal Open Market Committee in 2009, told the Forecasters Club of New York, “I’m convinced this is no time to relax our efforts.” In fact, recently, Bernanke and his central economic planners, announced that the Fed would purchase (print money) more than $1.25 trillion in government bonds and mortgage backed securities — all in an effort to lower interest rates further, unfreeze credit markets, and get Americans to spend like drunken sailors again. Naturally, the Keynesian’s believe this is the award winning recipe to produce a prosperous economy. Apparently, they have not been paying attention to the world economy since the 1930s.
But, some folks have been paying attention to that economy for the last eighty years or so and know that the answer to solving our current crisis is not more of the same Keynesian policies that got us into this mess. Ironically, some of these folks know more than our policymakers even though they come from traditionally command economy societies. Take Czech Prime Minister and current European Union president, Mirek Topolanek for instance. Last week, at an EU gathering he characterized U.S. government economic plans as “a road to hell” claiming that Washington’s massive stimulus packages and banking bailouts “will undermine the liquidity of the global financial market.” According to Topolanek, “We need to read the history books and the lessons of history and the biggest success of the EU is the refusal to go this way.” These remarks, coming from a man who use to live in a centrally planned society, speaks volumes about how Washington is pursuing the wrong course of action by attempting to spend our way out of the economic crisis. In any event, the sharp comments of Toplanek may indicate trouble in paradise ahead for the U.S. and her European trading partners