Those Who Don’t Know History…

...Are Doomed To Repeat It

Niall Ferguson is a historian, not an economist.  He has a huge arsenal of data and levies significant warnings and criticism at the national debts held by the Western world which is putting contries like the US and the UK at real risk of a sovereign debt crisis in a few years.  As a student of history, he sees where similar fiscal and monetary policy has failed time and time again in the past and what the bad results have been.  

   He takes the counterpoint to Keynesian economic playbook that says you should spend your way out of a crisis – a la Paul Krugman.  He gave this excellent presentation at the Peterson Institute for International Economics back in May that lays it all out.  If you have the time, watch the video as you can see his grim graphs as well.

If you don’t have the time, go to Tech Ticker on Yahoo and watch the shorter version via a couple of their segments with him from yesterday.,tbt,%5Edji,%5Egspc,spy,%5Eftse’s-advice-will-lead-us-down-a-road-to-ruin-518800.html?tickers=%5Edji,dia,spy,%5Egspc,%5Eixic,qqqq

   Ferguson levies an iron-clad argument against the fiscal policies of the US and the EU that bail out failed institutions (big banks, Freddie/Fannie, Greece, etc) by using exhorbitant amounts of money to temporarily get us out of the financial crisis of the moment.  This happens largely because our politicians make bad policy decisions and then do not have the will to make the needed austerity measure to cut back spending and raise taxes when we pay the consequences for those bad decisions.  Ferguson illustrates that all the while, we go deeper into debt and kick the can further down the road, making the consequences of our spending that much steeper when the financial chickens finally come home to roost.

  I will go one further and say that these politicians are so weak becuase we as the voters do not hold  many of them accountable.  We as a people generally are not comfortable with the truth that Ferguson puts in front of us and somehow we believe that the same politicians will affect real change in the corrupt system they operate in.  Why would they do that when it would adversely affect their power?  They LIKE the system we are in.  It is our job to toss them out.  Statesmen, not politicians are the leaders who will have the political will to address this mess we are piling on our children and grandchildren.

– G.S.


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