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Author: Goofyhoofy Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121517  
Subject: A Brief History of Time Date: 11/7/2000 12:45 PM
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Note: This is a political post and doesn't involve "investing" except in the macroeconomic sense, so if you're not interested, now would be a good time to hit the "next" button.

For those who don't recall, inflation ravaged the decade of the 1970's. We had three presidents who were clueless as to how to handle it. Nixon instituted wage and price controls, remember? A complete flop. Ford had "Whip Inflation Now" buttons printed. A mega-flop. Carter told us to turn off the Christmas lights. Whew. Flop city.

Reagan came in with new economic policies which later proved not to work and which he threw overboard, but they did foment a grueling recession which had the effect of wiping out the devastating inflational spiral which was destroying the economic base of the country. Point for Reagan.

He also championed a military build-up, which, following that recession, provided a lot of jobs and put the country back on the track to "full employment." I don't happen to subscribe to the "He won the cold war" theory, as the Soviet Union was already a hollowed out third world country on the verge of collapse anyway. Perhaps it accelerated the process, but it would have happened sooner-or-later, given the weak-kneed Soviet leadership. Does anybody think Joe Stalin would have let the wall come down?

Anyway, the military build-up had the happy benefit of preparing us to deal later with the crisis in the middle-east, where we get about half our oil and without which we'd all be taking the bus to work, assuming there was work and that the economy didn't collapse what with the auto and other heavy industries and raw materials producers so reliant on a steady and assured source of energy. Another Point for Reagan.

The "military might" that Bush displayed had the message of saying "Don't screw with us too much, we might get pissed." Perhaps the oil producers noticed. They seem to be forgetting, but then it's been a decade. Point for Bush.

Back to Reagan for a moment: he also tripled the national debt, and contrary to what some people think, the size of government was much larger (both in real and in percent of GNP terms) than when he became president. Minus for Reagan.

Bush was, however, unable to do anything about the Reagan debt bomb. Perhaps he just didn't have enough time, or perhaps he lost everybody's confidence over the "Read My Lips" imbroglio. Whatever, Minus for Bush.

Clinton raised taxes in '93/'94 at precisely the time most economic theory says he shouldn't have, shortly after the economy was coming out of the mild Bush recession. Apparently it was, like the Goldilocks story, "not too much" and "not too little" because it worked, and as the economy roared ahead tax revenues increased and a balanced budget was suddenly, and for the first time in decades, a real possibility.

The tax hike was supposed to help fund new government programs, but that got beat back in Hillary's health-care debacle and the Republican resurgence in '94. Point for Newt. Then he got full of himself and thought people actually liked him. He overreached at got killed for it. Minus for Newt.

Those increased revenues and debt reduction, however, gave the Fed the opportunity to lower interest rates, which created a virtuous cycle, spurring investment and the creation of jobs and profits, which created even more tax revenues. Point for Clinton.

Then he got involved with Monica which distracted the entire Washington establishment for another year, and that meant neither the Republicans nor Democrats could do anything to screw up the economy. Another Point for Clinton.

Then the Fed got worried about "too much growth too fast" and raised interest rates, which spooked the market and puts us where we are today. Minus for Clinton.

If you go back and look at the "Points", you will see that they are almost all accidents, and were not intended to produce the results they eventually did.

I therefore conclude that we have stumbled into our present happy state by virtue of having a bunch of nitwits controlling our destiny, and I'm quite glad for it.

If the nitwits can just keep the accidents going until I complete the Fool's Retirement Seminar and finish my portfolio adjustments, I will be quite delighted.

Therefore: "Vote for the nitwit."

And I think we will.
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