June 2010

Dr. John Taylor

Dr. Taylor discussed the American economy, the financial crisis we are currently experiencing then provided a laundry list of what caused the financial crisis and what prolonged it.

With our second largest audience in Conservative Forum history, it was quite a night.   280 conservatives were drawn to our new location by our great speaker, Dr. John Taylor.

Only our previous month's attendance of 500 exceeded this number in the past six years.

There was quite a bit of excitement even prior to Dr. Taylor's presentation. As we have been doing since the summer of 2009, we had four "cameo" presentations made by four conservative candidates for public office.

First was Ronny Santana, running to replace Anna Eshoo in Congress.  Ronny told us that he was a Reagan Republican, and outlined the differences between him and his Democrat opponent. Then came Chris Pareja who spoke to us on his birthday, indicating that he was 38, and that his congressional opponent, Pete Stark, took office in the year of his birth campaigning that "28 years was too long to serve in the Congress." Chris was followed by Rae Williams, candidate for the Board of Equalization, whose introduction was provided by none other than Tom Jones' "She's a Lady." Rae indicated that she was listed on the ballot as "Mother."

Finally, the ultimate warming up for the headliner talk came from Damon Dunn, who indicated that he was "mad as hell, and that he was not going to take it anymore." Damon did not parse his words; he said we are in a battle between socialism and capitalism, and he left the stage after a rousing message that elicited an enthusiastic response. Dr. John Taylor followed his former student at Stanford University with a very scholarly message about the American economy and the financial crisis we are currently experiencing. No Conservative Forum talk has caused the audience to do more note-taking than Tuesday, June 1. Dr. Taylor provided us with a laundry list of what caused the financial crisis, what has prolonged it, and what made it so bad.

Dr. Taylor keyed his opening remarks around the media and people's use (overuse in his opinion) of the word "Great." At the same time, he used the word to describe two general events that have caused our current financial situation - the end of the "Great Moderation" that worked for so many years for the US economy. He calls the end of the Great Moderation, "The Great Deviation," which he describes as a series of policies that deviate away from what was working. It is important to note that all "deviations" were government policy items. First was the monetary policy of Alan Greenspan and the Federal Reserve Board setting of interest rates. It was an ongoing problem that reached its zenith between 2002-2004 where interest rates were much lower than they should have been. Easy money led to a housing boom, which led to too much money, which led to a bust.

Secondly, there was the Stimulus Act of February, 2008 signed by President Bush, which did nothing to grow the economy. Then came what Dr. Taylor called the "on-again, off-again bailouts." This government intervention bailing out Bear Stearns, not bailing out Lehman Brothers, bailing out AIG caused uncertainty, and eventually a collapse of the markets. This was followed by President Obama's $787 billion stimulus plan, which has been no help whatsoever to the economy. Dr. Taylor indicated that the problem has been exacerbated and expanded in influence by the "Contagion of Deviation." This stimulus mentality spread to Great Britain, France, China, Brazil and all of the G-20 countries. While the stimulus phenomenon has done nothing to make things better, it has consistently increased debt. The lastest era in American economic policy has provided a "Legacy of Debt."

Other factors that have prolonged the problem and made it worse are the new ObamaCare, Federal Reserve intervention in the mortgage crisis, and the vicious cycle of debt in Europe with Greece, which will soon expand to Portugal, Spain and Ireland. Bailouts and borrowing have not been the solution; they have just been a method of kicking the problem down the road. Unless these governmental policies are reversed, Dr. Taylor indicates that the following things are predictable: high inflation, rising interest rates, reduced growth rates, and more frequent recessions. While he doubted it would happen during the current adminstration, he said there were three things that could turn this around: (1) Stop creating debt, (2) Reform entitlement programs. (3) Not add any more entitlement programs. 

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