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June 11, 2009



By Dick Morris And Eileen McGann 06.11.2009

Published in the New York Post on June 11, 2009

It’s increasingly looking like President Obama may be sunk by his own deficit.

Yes, the recession started under George W. Bush — and voters will still blame him for unemployment and related woes. But rising interest rates and inflation are the coming fears — and Americans will increasingly see Obama’s big-spending ways as the cause.

Deficit spending has always been Americans’ bete noir; the gospel of balanced budgets is deeply ingrained in our political and economic psyche. Through all the Keynesian experiments of the ’60s and ’70s, voters remained committed to a balanced budget. They worried as deficits rose in the Reagan years — then calmed as the economy turned up.

But when the news turned bad under the first President George Bush, they blamed the deficit — the issue was a major source of Ross Perot’s appeal in the 1992 election. And when President Bill Clinton (and a Republican Congress) finally balanced the budget, the economy bloomed — reinforcing public beliefs about the dangers of deficits.


One Comment
  1. Robert Edward Kroff permalink
    June 17, 2009 4:37 PM

    Gee, Dick, you wrote in your article- “Obama’s weakest link will come under strain. If, say, the falling dollar pushes up gasoline prices and rising interest rates kill off any revival in the construction industry, the deficit will cause a perfect economic storm for the president.”

    You said before that offshore hedge fund speculation drives up energy prices. Huh? Well forget that for now, lets concentrate on your blog excerpt I posted above in this comment box. Let me start by saying this- If the ratio of purchase power to earnings remains in a relatively historical rage the economic deflator will not matter. What matters is the tightening of currency. This means if currency policy is loose it all goes well, but if it tightens only then will a problem occur, and your scenario plays out.

    Reality check for you, Dick, courtesy of me. Consider yourself so blessed:

    Thing is that when energy prices rise, so do the deposits in the Federal Reserve. You know this too. You are not an idiot. Where do you think those oil shakes are going to park their cash? In countries that do not keep them in power? Get real. Every time foreign savings is dropped into the FED the dollar gets a boost. Federal Reserve notes are IOUs to depositors. What do you think our money is? The U.S. maintains the global balance of power, and those in power in oil producing nations drop their gratitude in the FED. Everyone else like China needs oil to make products :a place to sell them :a place to park their savings. So they too deposit their gratitude in the FED like everyone else. Even Europe needs U.S. protection, so in a way the FED owns the Pound and the Euro as well.

    Now for what really matters which is why I wrote this post; what really pushes up gasoline prices as you have made so very clear in the past. So how about this political sell?> The Executive allows hedge funds to operate offshore driving up energy prices, and energy producers then deposit their grossly out of proportion earnings/savings from this obscene fixed market dynamic through two account channels. One is where they deposit their savings into central banks here and abroad, but mostly here, and the other channel is where they buy T-bills here and abroad, but again mostly here. So as the later being revenue spent by the government it then can be said in theory that every time that this dynamic of investment cycle is allowed to be played out with the full permission of the executive that a speculation tax is being paid today by every energy consumer. A tax mostly on the middle class. Just a thought, Dick, based on information I have learned from you.

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