Blame it on Reagan: the new meme
Just as I was starting to link Reagan to the great monetary boom of the 80's, a book is coming out with Reagan as the culprit and Eve Smith quotes
Boom-and-bust cycles, obscene CEO salaries, blackouts, drug-company scandals, collapsing bridges, plummeting wages for working people, the flight of U.S. manufacturing abroad—these are all products of Reagan's free-market zealotry and his gutting of the public sector. Reagan pioneered the use of wedge issues like race and the war on drugs to distract America while his administration empowered corporations to lay waste to our traditional ways of life.
That's right, blame the Cowboy on that one, everyone says.
1/ It is true that deregulation set the stage. The financial markets were not to be meddled with. After years of scorn and disdain, it had become dogma that public intervention or regulation in free functioning markets would always lead to an inferior solution. What a naive view in retrospect. It seems regulation and free markets go hand in hand and dogmatic views do not make for happy endings. The opening of the monetary valves proved such a powerful political aphrodisiac. It was in fact Clinton that repealed Glass-Steagal. Remember if you tried to close monetary valves, you would die the horrible Carter political death. Yuck.
2/ But really it wasn't just Reagan. Reagan didn't manufacture and market securitization, bankers and physicists did. Reagan, was ultimately not responsible, and very probably un-aware, of the very wave of innovation that was taking place under his and Clinton watch due to the advance of IT, financial engineering and deregulation. Let's not forget that if the FED was setting the monetary agenda since the Carter days, it, itself, is susceptible to the influence of the private sector.
When a complex system shows signs of break downs, such as our credit economy, it is hard to single out one agent as the root cause. So credit is to blame, but who it made 'easy credit' so. It was the politicians, the bankers, you and me, it was our nervous system that rewards us every time we push the morphine pedal. We collectively blew this credit bubble up. The system is inter-twined, by definition of a living system. The narrative we make of the breakdown will quickly identify culprits and it will latch onto them. It is interesting that the culprit is usually the point of entry of the narrative (the politicians, or the bankers, or the people) and the other constituents can be cast as consequences or innocent bystanders.
Reagan it is! He deserves it too, the cowboy f*cked it up!
Comments
I blame Papa Smurf. He controlled everything and wore red. Clearly, a communist!
He was blue and cudly... And yes, Reagan, the reaganomics, the reagalation, the public deficit spending (on military mostly, star wars) they clearly set off the first monetary bubbles of modern days. I remember reading that Star Wars was genius because it clearly outspent the Russians who could not afford such a program. well 20 years later the books are being rewritten: the US couldn't afford such deficit spending either.
I guess we can look farther back, but I fear we'd find ourselves blaming Roosevelt for issuing war bonds during WW2. Reaganomics didn't cause this... Freddie/Fannie-nomics caused this. ;-)
Star wars was (ultra)genius because it never worked. It was a bluff.
First mass scale deficit spending. Constitutional violations that make Bush look like an author of the Constitution (mass arrests, speech curtailment, etc...). Implemented the Henry Clay system which began the long march of expanding the Federal government dramatically. Rapid expansion of fiat money (I own 2 pieces of 1861 demand notes which were followed up with a much more massive printing of 1862-63 notes). Lots of financial innovation. Etc...
Brilliant politicians, these two, and certainly left some good things in our legacy. But a lot of what we blame Reagan or Clinton or Bush for, Lincoln out did them all, esp spending in relation to the economy.
The aftermath was the Depression of the 1870s - probably a lot like what we are moving into.
Hehe, I am LMAO watching Roy wiggle on that one. This current credit bubble has Reagan written all over it. No you can't go back to WWII as those excesses were purged in the early 50's and followed by a curve of great stability of debt. Face it, your political hero was nothing more than a monetary wizard of oz. Bubbles bubbles.
I like Reagan a lot...probably the best president we've had in a long time. But he wasn't perfect either and really was just playing the script laid out for him.
We didn't spend much money on Star Wars...it was just a bluff. We've spent FAR more trying to prop up this housing bubble (the effort will fail anyway).
I will say it again, Reagan was floating in monetary waters. Since Carter had stabilized the inflation problem. Reagan could take all the credit, literally and figuratively.
phew, this is fun! I could do it all day long, but I got real work now, gotta go, bye!
Carter focused on balancing the budget... woop-dee-freaking-doo. It was political suicide. Voters don't care if the budget is balanced. They do care for all those things he neglected.
In the end, this is part of the ebb and flow of monetary policy. One administration enacts tougher oversight, the next removes it, and so the cycle goes and bubbles grow and pop.
If Reaganomics is to blame for some of this, I'd say give me the current recession over a nuke on my head any day.
Now let me get back to my yard and finish burying my gold, silver and Confederate paper money before Pelosi gets her hands on it! Just like the old days!!
:-0
LOL