Obama's Economic Bailout Will Hurt Economy

In particular, the authors, economists Charles Rowley of George Mason University and Nathanael Smith of the Locke Institute, claim that the White House's plans to pour hundreds of billions of dollars of cash into the economy will undermine it in the long run. They say that by employing deficit spending and increased state intervention President Obama will ultimately hamper the long-term growth potential of the US economy and may risk delaying full economic recovery by several years.

The study represents a challenge to the widely held view that Keynesian fiscal policies helped the US recover from the Depression which started in the early 1930s. The authors say: "[Franklin D Roosevelt's] interventionist policies and draconian tax increases delayed full economic recovery by several years by exacerbating a climate of pessimistic expectations that drove down private capital formation and household consumption to unprecedented lows."

Although the authors support the Federal Reserve's moves to slash interest rates to just above zero and embark on quantitative easing, pumping cash directly into the system, they warn that greater intervention could set the US back further. Rowley says: "It is also not impossible that the US will experience the kind of economic collapse from first to Third World status experienced by Argentina under the national-socialist governance of Juan Peron."

http://www.telegraph.co.uk/finance/...ma-accused-of-making-Depression-mistakes.html

I am a believer in the Austrian School of Econimcs so this study reflects my belief as to the mistakes we made in bailing out the banks. I think we should have taken more pain now so that we couldve rebounded sooner. Instaed we've tied an anchor to the economy's neck and it will be awhile before we are out of the woods. I dont think we'll go the way of Argentina but this administration doesnt fill me with the most confidence that its guaranteed to be avoided