618.) President Obama met with leaders of the European Union about their debt crisis. The President said, “
I communicated to them that the United States stands ready to do our part to help them resolve this issue. This is of huge importance to our economy.” Yes, it is important to our economy to have people to export to. This is a lesson that can be learned from the past. In 1929 the United States Economy tanked, much as it had earlier in that decade. Unlike the previous crash, Herbert Hoover was now no longer part of the President’s Cabinet, he WAS the President, and as such he was in a much better position to inact progressive policies that he thought were essential during the first crash. One of the things he did was, like all progressives, raise taxes. He did not raise them on inviduals though, he raised the tariff on imported goods. His belief was that this would spur a buy American movement, which would spur the economy on. However, this was not the case, the people whom we exported too did not like that we were now taxing their goods, so they raised their taxes on our goods. So our goods where more expensive in other countries, fewer people bought them, and that hurt the economy… who would have thought raising taxes was bad. So President Obama is right, if Europe crashes, fewer people will be able to buy our goods, thus our economy will get worse.
Now that that is said, I have a major question, how does President Obama think that the United States of America is going to be able to help the EU?
His comments did suggest that he was not willing to give anymore of China’s The United States money to the EU. That is good news, but I still wonder what it is that we are going to do to help?
One possible solution would be to support the International Monetary Fund, lending the European Union more money. This sounds like a good idea, supporting someone else lending the EU money, rather than giving the European Union the money that China gave us. Just like how President Obama gave control of the Libyan Conflict over to NATO. Wait, that was a slieght of hand, because the United States funds most of NATO. Now that I think about it, I think this would be a slieght of hand as well. Allow me to explain, the IMF is an orginization that was developed in the 1940’s with the intent of promoting international economic cooperation, international trade, employment, and exchange rate stability. There was also another, more important function. Each country in the IMF put money into a pot. This pot was a resource that nations could temporarly borrow from to meet payment imbalances. Not all countries have contributed equally, and suprise suprise the United States is the largest share holder in the IMF. Now many people will say that the IMF already has plenty of funding. The problem though is that, if this plan fails, the IMF will have to restock the pot, and where is a lot of that money coming from, your pocket.
Now President Obama did not suggest the IMF, that was brought up by White House Spokeperson Jay Carney, I am not sure that this is the step that has been choosen, I am just saying that it was suggested.
What concerns me is that the greatest minds in the world are talking at these summits, people like Treasury Secretary Timothy Geithner, a man who could not figure out Turbo Tax is going to try to solve the economic crisis in Europe?
The main reason behind this post, is that I am concerned when our President is promising to help someone with their debt crisis, when he has done nothing but compound our debt crisis here at home. Any action we take to provide monetary relief would only make our situation worse.
I suggest looking to the past. I do not know specifics, but I do know President Obama’s thought process. He does not look to fix the problem he just likes to cover it up, also known as “priming the pump” with massive government spending, which never works to spur on the economy, after all it is massive government spending that has brought the United States to the situation we are in now, and has brought the European Union to its knees. The main problem with the progressive mindset is eventually you run out of someone elses money. What I suggest doing is cutting taxes on international trade. If the members of the EU agree to cut their tariffs on United States goods, and the United States cuts the tariffs on the goods coming into the country from the EU. Lets do the opposite of whatbPresident Hoover did. More money coming into both groups, means more tax revenue from income tax, which brings stability to the financial system. Government only has money if the people who pay government have money.
Time will tell. I just wish President Obama would tell us how he planed on helping the EU.