I wrote a letter to President Obama posing a question to him and have not yet gotten a response (letter is below). Maybe someone has an idea of what the answer might be.

Does anyone know Larry Summers? I just read an article about him in Newsweek.

As someone who studies and teaches physics everyday, it boggles my mind how the general public does not understand that money cannot be created from nothing. The laws of thermodynamics will not allow this (in general terms). You never get something for nothing… the longer you fake this process the more painfull the end result will be.

My wife and I call this the:

“Arrogance of the college educated middle class effect”

Here is the letter I wrote to our President:

Dear Mr. President,

I am a high school physics teacher that has never been very involved in politics. Over the past few years, while President Bush was in office, I have been educating myself more and more about politics, economic policies, and monetary policies as I noticed things happening in our country that did not make sense. I see my students’ future being stolen from them, or should I say “SPENT from them” before they even have a chance.

It is very upsetting to me to be upside down on a mortgage, as I’m sure it is to every homeowner in this country. But this is my problem, not the future generations’ problem. The prices of real estate were (and still are) unsustainable and are crashing down, and that needs to happen. Trying to prop up prices (price fix) is simply not possible and all these billions and trillions spent will have been wasted even though the bills are still due for the future generations. This is immoral!

As I watched your National Address Monday night, February 9th, promoting your stimulus plan, I became very aware that you are starting to say the same inconsistent “things” President Bush use to say. One thing that caught my attention was when you referenced how the New Deal ended the Great Depression.

I know your time is limited, so I will get to the point.

Question 1:
Are the economic advisors you are listening to the ones that were predicting this economic crisis years or decades ago when it was starting?

If I may take the liberty of answering this question… if I’m wrong please correct me… the answer is NO. Every economist that I have read, heard, or watched on TV that was predicting this major crisis, as it fell on deaf ears, also say the “New Deal” not only prolonged the depression but made it worse. The New Deal caused dairy farmers to pour milk down the drain and plow grain fields under as people were starving. The economists that were predicting this economic crisis have written that we did not get ourselves out of the Great Depression until after WWII. They say that it was the fact that the infrastructure around the world was, for all practical purposes, destroyed except for America’s. Thus we were in the position to work around the clock to help rebuild the “world”.

Question 2: (I would really like an answer to this question.)
Why are you listening to economists that were not able to predict this economic crisis? One that you say is not your “run of the mill recession”… One that was very obvious years if not decades ago when it was starting.

I can’t begin to guess why you would take advice from economists that were obviously flat out wrong about the state of our economy. I may be overstepping my bounds here but… If I was president, the first thing I would do is fire anyone that deals with economic policies that was not predicting this major economic crisis our country is now facing. I would be listening to the people that have been predicting this crisis. Every economist that was predicting this crisis all say these bailouts are the opposite of what we need to do. What needs to happen is for all the malinvestments to come out into the open so it can either be paid off (not from government bailouts) or defaulted on. Yes, it will be tough for a year or two… or three… but we will be able to recover. If we continue to try and keep the real estate, stock market, bond, and “life-style” bubbles inflated, we are looking at a major economic meltdown and the destruction of the dollar. The economists that have been predicting this crisis are now predicting that if we “Stay The Course” with these bailouts, life for the average American will be much, much worse than if we just suffer the consequences today of our over exuberant spending habits. They say that it will take decades, not years, for us to recover if we continue to put ourselves into more debt that we cannot afford.

I don’t pretend to know the answers, but nothing frustrated me more than when President Bush and Secretary of Treasury Paulson went on national TV demanding the $700 billion bailout, when less than a week earlier they were saying the American economy had never been stronger. What is the American public supposed to believe?

Thank you for your time,

Dan,

Never trust an economist that can predict the future! Most economist predict the past including those that write in this website.

When buying anything, understand the real value and do not pay more.

When the cost of anything goes up beyond the normal level appreciation, you can be sure it will come down just as fast and fall further than it went up.

Increased productivity is the key to economic recovery. Over the last 100 years inflation has cut the value of the dollar by 95%, but over the same period, productivity has raised our standard of living 1000 times. Increased productivity can be realized with a decrease in investment.

Magisterially written as always by Mr. Rockwell, and kudos for rehabilitating the word “liberal”. But I think it is too generous to assume that current policies are meant to promote the general economic welfare. From my perspective, it seems that the administration and congress are simply extracting as much rent as possible for their cronies, all the more urgently now that it appears the gravy train might run off the rails.

I’d say they’re doing an excellent job. Many who are usually skeptical seem to believe current policy really is promoted with the purest of motives. 2.5% growth in DC while the rest of the country freefalls? If that is simply the accidental result of public-spirited attempts to improve the general economic welfare — then, oops, they did it again.

Do you honestly believe this self-serving crap? Do you? Why do you preach it here where NO ONE is apt to fall for this nonsense? No one but the utterly deluded.

What needs to happen is for all the malinvestments to come out into the open so it can either be paid off (not from government bailouts) or defaulted on. Yes, it will be tough for a year or two… or three… but we will be able to recover.

Some of the “malinvestments” include social security and medicare.

Before this recent “subprime” crises became obvious the US was already on a path to default without substantial cuts in US spending (like ending Social Security and Medicare) which very few in congress would support.

So they will be defaulted on when our money is worthless.

The current crises just pushes the date ahead a few years (probably very few years).

It’s not limited to the US, it’s the same here in Germany and for what I can tell in GB, France. etc. All governements are run by bureaucrats. Just take as one example our minister for economy Mr Guttenberg. He’s economic knowledge is “nearly non existant” and he even “lied” about it before he started. In Germany you can’t find any business man/woman in higher positions. And so are the results, disastrous.

You can not even make them take responsibility you even can not ask them. If they squander the money of the tay payers, well bad for all but it’s not that one alone has a damage. So our courts do not accept any inquirey about it if you doesn’ thave a direct damage.

The point is they never ever have really worked for their own money with “customers” the make laws to still their appetite, but as it seems it’s instillable…..

And so we are heading faster and faster towards a extreme crash. And guess who will be responsible for the crash. You got it the “economy…”

What we currently see is mass hysterie, and every reasoning is burried among panic. See all the “failout” plans. They always claim we have to restore trust in banks …. or whatever, but their actions just make it worse and worse. How can anyone believe in higher trust if e.g the politician throw out money they do not possess. How can it bee that still the belief is that more money is a cure for too much money?

Yet another in an endless series of ivory tower pieces.

The “free market” is a joke your professors told to you, and you never saw beyond it. Somewhere out there is a professor fairly begging some student to talk about the not-so-free market that is the reality in which we find ourselves.

It’s funny too; your use of certain reflex words such as liberal show that you are a trader in the not-free market of Power.

Chicago, Austrian, whatever… none ever address the Power market. You show me an economic model that does not address the Power market, and I’ll show you a model that fails in the world.

Every trade that takes place in the Power market is done with unfair advantage as the goal, and it is the reality of our existence.

It would be nice to see this addressed head on, but it seems fear of offending Power trumps all.

I listened to Bill Gross on CNBC a couple of weeks ago talk about participating in the private purchase of toxic assets as long as the government sweetened the pot. He said he makes no apology for being a capitalist, and Larry Kulow praised him.

Do you get the joke?

I got it and cried.