FORTUNE — Of all the highlights of Allan Meltzer’s half-century as a distinguished monetarist — advising Presidents Kennedy and Reagan, producing celebrated books on John Maynard Keynes and the history of the Federal Reserve — none proved more memorable than a crisis session at 10 Downing Street in mid-1980.
A group of 346 noted economists had just written a scathing open letter to Prime Minister Margaret Thatcher, predicting that her tough fiscal policies would “deepen the depression, erode the industrial base, and threaten social stability.” Thatcher wanted to make absolutely certain her unpopular attack on huge deficits and rampant spending, in the face of high unemployment and a weak economy, was the right one.
Initial claims for jobless benefits rose by 12,000 to a seasonally adjusted 472,000, the Labor Department said Thursday. It was the highest level in a month and overshadowed a report that consumer prices remain essentially flat.
First-time jobless claims have hovered near 450,000 since the beginning of the year after falling steadily in the second half of 2009. That has raised concerns that hiring is lackluster and could slow the recovery.
There’s nothing wrong with throwing a little money at a problem to make it go away. There’s equally nothing wrong with throwing a little borrowed money at a problem to make it disappear, as long as you have the means to pay that borrowed money back.
But what happens if you throw a lot of borrowed money at a problem, and the problem doesn’t go away? If you’ve ever experienced a situation like that you can probably understand how Europe feels right now. It just unleashed a magnificent $1 trillion euro bailout and the market responded with a selloff by the end of the week! So what happened? That money was supposed to make the problem go away, after all. And it was a lot of money. Why did the market respond to it with such disdain?
Listening to AM640 here in Toronto today, I heard an excellent discussion about the letter from “The Boss,” a truth-be-told debate about the value of tax-cuts, stimulus and taxation. In the current climate of government intervention, and neo-socialism, the letter is a breath of fresh air for those of us who have made the greatest productive contribution. Thanks to Charles Adler  for posting the letter at his blog.
To go one step further, it is reminiscent of the world of Ayn Rand’s “Atlas Shrugged,” in which the story’s heroes, the entrepreneurs, the innovators, the captains of industry, the prime-movers, decide the best remedy is to withdraw, to go on strike, as the world is looted by bureaucrats, socialists, pseudo-intellectuals, and mystics.
Memo to All My Valued Employees
Author: The Boss
There have been rumblings around the office about the future of this company and, more specifically, your job. As you know, the economy has changed for the worse and presents many challenges. The good news, however, is this: The economy doesn’t pose a threat to your job. What does threaten your job, however, is the changing political landscape in this country.
First, while it’s easy to spew rhetoric that casts employers against employees, you have to understand that for every business owner there is a back story. This back story is often neglected and overshadowed by what you see and hear. Sure, you see me park my Mercedes outside. You’ve seen my big home at last year’s Christmas party. I’m sure all these flashy icons of luxury conjure up idealized thoughts about my life. But you don’t see the back story.
I started this company 12 years ago. At that time, I lived in a 300 square foot studio apartment for three years. My entire apartment was converted into an office so I could put forth 100% effort into building a company, which, by the way, would eventually employ you. My diet consisted of noodles because every dollar I spent went back into this company. I drove a rusty Toyota Corolla with a defective transmission. I didn’t have time to date. Often times, I stayed home on weekends, while my friends went out drinking and partying. In fact, I was married to my business — hard work, discipline, and sacrifice.
Meanwhile, my friends got jobs. They worked 40 hours a week and made a modest $50K a year and spent every dime they earned. They drove flashy cars and lived in expensive homes and wore fancy designer clothes. Instead of hitting Nordstrom for the latest fashion item, I trolled through the Goodwill store extracting any clothing item that didn’t look like it was birthed in the ’70s. My friends refinanced their mortgages and lived lives of luxury. I did not. I put my time, my money, and my life into a business with a vision that, some day, I too, would be able to afford the luxuries my friends had.
By Ron Paul
hat tip: Campaign for Liberty
Last week marked the one year anniversary of the American Reinvestment and Recovery Act, or the stimulus bill, passing into law. While the debate over its success has been focused on whether or not it is stimulating the economy and on various questionable uses of funds, in my estimation this legislation is accomplishing exactly what it was intended to accomplish — grow the government.
Those of us concerned about the ever increasing level of government debt gasped at the astonishing $787 billion cost estimates for this bill. True to form it has actually cost 10 percent more at $862 billion. We heard over and over that government could not sit around and do nothing while people lost their jobs and houses. The administration claimed that unemployment would not go above 8 percent if the stimulus bill passed. Now, a year later, the government estimates that unemployment is over 10 percent. The real number is closer to 20 percent. It appears that those promises were total fabrications in order to close the deal.
In any case, the American people know that more government spending obviously equals more government. If the goal was to strengthen the private sector, Congress would have allowed businesses and individuals to keep more of their own money through meaningful tax cuts. Outrageously, the administration claims that they did “cut taxes” by reducing withholding, and that they have stimulated the private economy by increasing the amount of money in every worker’s paycheck. What they fail to mention is they did not change the total amount of taxes due. This means that all that money not withheld from paychecks will add up to a big unpleasant surprise when returns are filed this year. Many tax preparers are already seeing shocked taxpayers having to come up with big checks to the government when they normally expect a refund. Stimulus, indeed!