Newt, the Political Opportunist

Since the political wind has blown in Newt Gingrich's direction (see here), I thought I'd interact with Newt's article dated on the 8th of November (read here). Now I must confess Newt Gingrich is a very intelligent man, but he is sadly a political opportunist. He simply doesn't have a consistent bone in his body except for one. That bone is to ensure government power goes toward Republicans.

In his article he says he wants to repeat what Ronald Reagan did in the 80s. Being the historian, he states an observation in the first paragraph.

Since the Great Depression, recessions in America before this last one have lasted an average of 10 months. The longest previously has been 16 months. But here we are 46 months after the last recession started, and there is still no real recovery.

Now why is that? Is it really merely because President Obama has done a great job at making certain no recovery takes place. Well, I have to agree. Anything President Obama could do to slow down the train that is heading off of the cliff is being ignored. Yet why do we assume that slowing down the train will somehow prevent the train from wrecking?


He appeals to the era of Reagan,

Ronald Reagan did it, with arguably worse circumstances than today: double digit inflation, double digit unemployment and double digit interest rates. We did it when I was Speaker of the House, when the American people created 11 million new jobs in four years. Returning to these principles would restore another economic boom within a year.

Assumption: High interest rates were bad. But why were they bad? They were bad because the Federal Reserve, with Paul Volcker, didn't print money for the Big Boys. Instead, they reduced the money supply and increased the value of the dollar. Now depending on your point of view, you might think this was bad. You may even think Reagan saved our economy and perhaps in the way of taxation, he helped. But as these websites explain, Volcker's policy reversed our money from being inflated in the manner that the current Federal Reserve is doing.

Read here:

Carter cannot be blamed for the double-digit inflation that peaked on his watch, because inflation started growing in 1965 and snowballed for the next 15 years. To battle inflation, Carter appointed Paul Volcker as Chairman of the Federal Reserve Board, who defeated it by putting the nation through an intentional recession. Once the threat of inflation abated in late 1982, Volcker cut interest rates and flooded the economy with money, fueling an expansion that lasted seven years. Neither Carter nor Reagan had much to do with the economic events that occurred during their terms

and here

Although inflation came down slightly in the mid 1970s, prices soon began to accelerate to the point that, by the end of the decade, curbing inflation replaced reducing unemployment as the Carter administration's primary economic priority.


To this effect, in July 1979 Jimmy Carter appointed Paul Volcker to succeed G. William Miller as Chairman of the U.S. Federal Reserve. Although there remains some debate about why Carter decided on Volcker, who was then serving as President of the Federal Reserve Bank of New York, the move signaled Carter's sanctioning of a disinflationary monetary policy.

But the underlying and fundamental problem to our economy's "boom and bust cycle" [think the dot.com bubble, housing bubble so on and so forth] is the Federal Reserve's power to print money and the government's power to regulate by a command and control economy.

Newt states something that all Republicans are saying.

My economic recovery plan also narrows the Federal Reserve’s statutory mandate to focus on price stability so as to maintain a stable dollar without inflation. That ensures job creating investors from the world over that their investments in America will not be depreciated by a declining dollar or inflation.

Now what does Newt mean by this? Does he plan on more money printers? Or does he plan to do what Paul Volcker did and reduce the money supply, thereby increasing interest rates?

It is simply difficult to know for certain since no one knows which Newt will show up to a political discussion. As Robert Higgs notes in his article,

Franklin Roosevelt "did bring us out of the Depression," Newt Gingrich told a group of Republicans after the recent election, and that makes FDR "the greatest figure of the 20th century."

We must remember that Newt may be a great historian and knows full well the error of price controls, but he is in government. What is good for Americans & liberty is bad for government, and what is bad for Americans and liberty is good for government. As he states later in the article:

Finally, my plan slashes the runaway regulatory burdens that are killing jobs. This includes repealing and replacing Obamacare...

Please don't miss the barely stated assumption. He doesn't want to eliminate government's role in solving our problems [please think of him working with Hilary on green issues]. He simply wants to have Republicans doing the solving by replacing Obamacare with something else.

So if you think that Roosevelt's policies of extending the Great Depression was a good idea, then I am not certain how Newt is your man.