Once upon a time, I thought that when a politician did or said something really ridiculous it was because they were being purely political, but really in their heart of hearts, they knew better.  In other words, if a politician says something like "America needs more stimulus" they likely knew that in all the history of such things, literally none have ever worked.  What I used to believe, was that politicians who said such nonsense were simply being disingenuous.  Now, I think they are just stupid.

I mean, no one could repeat as much baloney as the talking heads on Capitol Hill, over and over again -  and not really believe it.  Insincerity does not excuse the situation - it as if that was the case - and as we are staring into the recession, a reasonable person would put aside partisan propaganda and do the right thing for the country.  But it is not the case. They, meaning those that continue to add insult to injury, must really believe that just adding liquidity (printing money) is going to work out in the end.  It's all a bit mind-numbing.

Now, I have had this discussion with a lot of people, many of who are believers in government stimulus.  Inevitably it always goes back to the "New Deal."  When I point out to them that between 1932-1940 things in America got progressively worse, the inevitable retort is that World War II and all the government spending pulled us out of the Depression and thus proving that if you do spending on a big enough scale, it will work.  Hence what is happening now, as things get bad, it doesn't take long before politicians start calling for a War on this or a War on that.  The problem is, even though  most Americans would believe that WWII ended the Depression, they are mistaken.

For those of us who did not live through those years and for those of you who did, 1940-45 were years of a command economy and shortages of everything.  You couldn't buy a new car or nylons or chocolate or much of anything else and if you could it was with ration coupons.  In other words, for those years we had essentially a Soviet System.  We were so understandably devoted to winning the war that we ignored the hardships, but to believe that this rationing somehow  ended the Depression is a gross misreading of history and it’s also absurd.

Let me prove my point. If this logic were true, then what President Obama should do is call up the Prime Ministers of  Japan and Germany and tell them to build a huge fleet of warships, as big as those they both had in WWII, with America doing the same, and we all load them up with tanks and airplanes and bombs, and then sail them out into the middle of the ocean and sink the whole damn thing.  That ought to do it!  At least, that is what the "War on anything defeats an economic downturn" argument would say. It's absurd I know, but this is even what most kids are taught as history.

What really ended the Depression was the rush of consumer demand beginning in 1946. Millions of folks freed - both of the war's rationing and the end of the New Deal - which happily died in 1940. Freed of government interference and doing without, good old "free market" demand fueled the boom. That is the lesson we should learn.  Government is just feeding on the free market.  To the  extent that they stop, is the extent by which we will succeed.  Every dollar spent by a government is a dollar taken from the free market or worse, created out of nothing, stimulated by paper money, leading to bubbles and busts.

In fact, I believe our entire economy is just one big bubble at this point and virtually all pricing of everything is suspect with few exceptions.  More on that later.  Meanwhile just remember, soon these politicians will not be fooling anyone.