A Bernanke Trumps An Obama and We Lose Either Way

According to Joel Kotkin, writing for the Orange County Register, in spite of the media blather, this is ot the Age of Obama we are living in; but the Age of Bernanke. The Obama’s annual trillion plus dollar stimulus spending investments have hardly made a blip on economic radar; unless you are a union member or work for GE manufacturing windmill generators or work for the company that manufactures drones. But, Kotkin explains at length how the trillions of dollars the Bernanke is creating out of thin air are making life better for one segment of American society.

But the Bernanke policies have succeeded in reshaping the economic landscape in ways that, while good for the plutocracy and Wall Street, are not particularly positive for the vast majority of Americans.

Kotkin does an excellent job of explaining the winners and losers that the Bernanke has created. Asylum Watch was impressed by the way Kotkin, from the People’s Republic of California, is able to see through the myth that it is the Republicans who are the Party of the rich and the Democrats are the Party of the middle class:


This new corporatism that is becoming an integral part of the supposedly middle-class oriented Democratic Party. Close Obama advisers, like disgraced investment banker and political fixer Steven Rattner, Obama’s czar for the auto bailout, justify collusional capitalism, both in China and in America’s “too big to fail” regime.

The reality remains that, rhetoric aside, corporate cronyism remains at the core of this administration and, sadly, the once-proudly populist Democratic Party. After his confirmation, we can expect former Citigroup profiteer Jacob Lew to follow Treasury Secretary Timothy Geithner, working along with Bernanke, to make sure the big Wall Street firms continue to thrive – even if the rest of us don’t.

So, while the Obama pretends to be a populist by redistributing crumbs to the ever-growing dependent class, he and the Bernanke are both feeding the corporatists and patting themselves on the back. However, this has been tried before and it didn’t turn out so well.

The reality remains that, rhetoric aside, corporate cronyism remains at the core of this administration and, sadly, the once-proudly populist Democratic Party. After his confirmation, we can expect former Citigroup profiteer Jacob Lew to follow Treasury Secretary Timothy Geithner, working along with Bernanke, to make sure the big Wall Street firms continue to thrive – even if the rest of us don’t.

All this is reminiscent of something out of the declining days of the Roman Empire. The masses get bread (food stamps) and circuses, with virtually all of Hollywood and much of the media ready to perform on cue. The majority, losers in the Bernanke economy, lack the will and, maybe, the attention span to realize what is happening to them.

“The Roman people are dying and laughing,” the fifth-century Christian writer Salvian wrote. Like America today, entertainment-mad Rome suffered from a declining middle class, mass poverty and domination by a few wealthy patricians, propped up by a compliant government. Unless Americans of both left and right wake up to reality, our civilization could suffer a similar inexorable decline in the Age or Bernanke.

I’d bet that the clowns in Rome were funny. I’m not laughing at the clowns in Washington. It really is an asylum that I am watching.

Well, now you know what I’m thinking. What are your thoughts?


33 thoughts on “A Bernanke Trumps An Obama and We Lose Either Way

      1. You are correct. Thanks for bringing up Salian. It had been some time since I a read his writings, and spent some time rereading some of his writing as well as others of his time. I can’t say I will sleep an better for my efforts.

  1. A small point… for the record…
    So far, even including the 2009 “stimulus” that didn’t stimulate the economy, President Obama has not increased federal spending much at all… just 1.4% according to a May 2012 report in Marketwatch:

    Under Obama, federal spending has increased far less than under the 4 most recent presidents going back to Reagan in 1982.

    It is not because he does not want to, Obama has not increased spending because he can’t!

    The current trillion dollar deficits under Obama are NOT because of increased spending. They come mostly because recession revenues are down, existing non-adjustable mandatory entitlement programs costs are up and the just-ended payroll tax reduction.

    Truth is, the real damage President Obama has wrought on federal budgets has not yet been fully realized.

    The first big Obamacare tax increases only just started in January and in 2014 when 30+ million more Americans are on Medicaid the costs will skyrocket above our worst fears.

      1. The Fed chart very, very nicely illustrates my point that the trillion dollar deficits resulted directly from the 2008 downturn in the economy. (the difference between the blue curve and red starting in 2008)

        Taking a skeptical view of the Marketwatch figures, I used The Fed chart that you identified (red curve part) to do a quickie cross check on the Marketwatch numbers.

        The yearly expenditure data from The Fed was downloaded into Excel from here:

        The results are not the same as Marketwatch. The Fed reports the actual expenditures, not the OMB/CBO projected numbers used by Marketwatch.

        Indeed, The Fed numbers you pointed out also show that President Obama has had the smallest percentage increase in spending of each of the last 5 presidents from 1982 through 2012.

      2. TARP is basically unrelated to either an increase or reduction in federal spending.

        TARP loans were made and then repaid. Its overall spending impact is about zero.

        Taxpayers have made a small profit so far, but it is not enough to amount to a hill of beans within trillion dollar deficits!

        The only TARP loans Obama is responsible for are the auto bailouts. The other loans were made in late 2008 before Obama became president.

        It is noteworthy that the auto bailouts are the only major remaining TARP money losers. Obama gets the blame for that. Even after $10.5B in auto bailout write-offs, GM still owes about $20B.

        Interest profits from the bank loans made up for what was lost in the Obama auto bailouts.

        I believe everything I’ve said is logical, consistent and correct based on the FRED data you pointed out above and today’s latest TARP report. 🙂

      3. “TARP was repaid on Obama’s watch. Why didn’t his spending show a decrease?”

        TARP is a collateralize loan program. Most of the $418B obligated under the program was funded with corporate asset transfers (stocks and securities), not cash.

        $338B or so was obligated under Bush and $80B obligated under Obama.

        Even if all $418B was under Bush and in cash it is still only about 1/3rd of a single year’s deficit spending while repayments have come back in spread over a 4-year period.

        TARP’s actual cash repayments are swamped by the $13-$14T in total federal spending over the last 4 years. That is why spending has not showed any noticeable TARP repayment decrease under Obama.

    1. I guess if you read and believe Rex Nutting, you probably read and believe Paul Krugman, who also advances the same propaganda. In that case there is little to be said, regardless of the obvious manipulation of the calculations from the budget-base latest year and the omission of the year 2009.

      There is no space here to try to refute manipulated yearly budget and fiscal deficit figures. But the best guide, and final bottom line, of whether we are spending more or less are the debt figures – these are very difficult to manipulate and are published data from the Treasury Department. These show: total national debt at the end of 2008 of $9.6 Trillion versus $16.5 trillion today.

      If you can come up with an explanation of how with only a 1.4% yearly average of spending growth in the last four years we have increase our national debt by 72% in those last four years, I am willing to listen, I’m anxious to listen, I’m wishing to listen.

      1. The explanation is simple… when the deficits are astronomical to start with, you can pile up a huge amount of debt – in the trillions – even with a 0% increase in yearly spending!

        Because Obama coincidentally assumed office at the height of the Great Recession it is a little more difficult figuring out what part of 2009 spending he is accountable for.

        The Obama “stimulus” was passed in fiscal year 2009 (Bush’s last budget year) but not a lot of it was spent before fiscal year 2010 began on October 1, 2009.

        When I recalculated the percentage of spending increases for Reagan through Obama with the FRED data using annualized, seasonally adjusted numbers I got an average 1.9% yearly increase in spending for Obama. Marketwatch used different data to come up with their 1.4%. No matter, it is still less than the other presidents.

        Obama most certainly would outspend all 4 of his most recent predecessors if he could, but the pathetic state of the economy is preventing him from doing so. The deficits are high just to pay for existing services. “Stimulus” and payroll tax cuts were contributing factors, too.

        One big difference between federal spending and national debt growth… National debt growth includes debt interest servicing costs, but federal spending outlays do not. The interest costs should be reported in both places, but they are not.

        That is how we’ve accumulated nearly $6T in the national debt since the day Obama took office despite a very low yearly increase in federal spending.

      2. Az, everybody understands that you can keep on increasing debt levels with a zero deficit annual increase if deficits are very high and remain steadily high. Basic. But the $7 trillion (not $6trillion) increase in the debt level from January 1st, 2009, cannot and has not been explained with a 1.4% annual increase in the deficits (a false figure that you claim and I use only, and only, for advancing the trap you are in) . Obama has accumulated deficits of $4.5 trillion in his four years. If you add 1.4% compound interest starting in 2009 debt level and fiscal deficit, you end up with $14.8 trillion debt level. We have $16.5 trillion today. That difference of $1.7 trillion – 24% of the total debt increase – cannot be explained by your no-spending-high-level-deficit theory.

        The fact remains that the $7 trillion increase in our public debt in the last four years is unprecedented and higher that any other four year period in our history after WWII.

        (you have been bamboozle into the windmill of statistical budget methodologies, to be kind, used by the shady practitioners of political demagoguery)

      3. Addendum: and no, the difference of $1.7 trillion cannot be explained by your secondary fallback of “interest rate on the debt” with interest rates at historical lows.

    2. Obama’s increases have been small, because the largest increase happened in Bush’s last budget year… Written by Dems (Reid-Pelosi), never signed by Bush, but signed by Obama. This false narrative that Obama and the Dems are not growing spending very fast was thoroughly debunked last year when it was floated. They pegged the needle and just haven’t had to do more… Note that the “stimulus” never fell out of the budget (if there were a budget, I should say it never fell out of the spending). Over $800 billion that was supposed to be a one-off stimulus… look at the spending in subsequent years and tell me where the $800 went. The other factors you cite are part of it, but Democrat spending (which Obama signed despite it being attributed to Bush) prior to Obama’s first “budget” had already pegged the needle and they’ve kept it pegged. Like you said, it’ll only get worse.

  2. Regarding Obama (government) and Bernanke (The Fed)…
    They serve two distinctly different masters. Government controls fiscal policy that targets government services and spending. The Fed controls monetary policy whose dual mandate is price stability and maximum employment.

    Imo, Obama and Congress are totally clueless and motivated purely by politics when it comes to economic policy.

    Imo, Bernanke is doing the best that can be done to meet the dual mandate with the monetary tools he has to work with. The problem is that because of the depth of the Great Recession that it is doubtful those tools can do the job… AND…they have morphed into some danged scary financial exposures for The Fed.

  3. Bush’s final budget request was $3.107 trillion for FY2009. Obama’s request for FY2010 was $3.552 trillion. It was $3.803 trillion for FY2013. That’s up over 22% from the final Bush budget request, key word being request.

    Market Watch is using actual Congressional expenditures to distort for purposes of making their point increasing the 2009 number to $3.52 trillion according to their article.

    Then were into the technicalities game since only Congress can appropriate the money but the President still has to sign it.

    Attempting to keep apples to apples means sticking to Presidential budget requests to determine which President planned on spending more. That way you take out the whole TARP/stimulus debacle from the debate. Sure, baseline budgeting factors in annually, but the President isn’t tied into requesting the higher increased floor each year.

    Getting to the point of your post, it sure isn’t pretty. Unless you’re part of the “in” crowd.

    1. My argument is that you have to go back to pre-Reid/Pelosi to get a really accurate read on what a difference a Democrat makes. And Bush was a big spender with a Republican Congress that was also profligate. But we hadn’t seen profligacy yet (plus the deficit was down to $162 billion in the last Bush budget before Reid/Pelosi unified Congress under Dems. Were things so bad when the deficit was $162 billion? I don’t recall people starving in the streets or fires not being put out and we were conducting two wars at the time.

      1. Pat, I certainly wasn’t trying to defend Bush as not being a big spender. Anytime you’re proposing 3+ trillion annually, you’re in the big boys club. Proposing increases over 22% higher than that and claiming it’s no big deal is just spin at its finest.

        I get a kick out of the new narrative used to defend Obama that we don’t have a spending problem, only a revenue problem. Obama might as well throw out a $10 trillion budget and make the same claim. Can’t wait until he finally gets cap and trade through and then figures out how to tap our pensions. Revenue Heaven!

  4. What is really scary is the prices of stocks and the prices of gold. The inflation hedges the rich can afford and the average middle class person can’t. The big money seems to be betting on inflation. If that happens, we will have a two class system: the rich, and the dependent. Fun. Good times…

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