Mitchell. Senator Harkin of Iowa, a darling of the Zionist lobby, called Bush "the Herbert
Hoover of the 1990's." A Herblock cartoon showed Bush standing by a line of
unemployed holding a sign reading "Recovery Is Just Around the Corner," while the
ghost of Herbert Hoover looked on and a middle-class jobless man in a business suit
asked, "George Herbert Who> Bush?" George was indeed being Hooverized.
This meant that economics was Bush's leading political problem. Under these
circumstances, his approach to economic management would reflect the understanding by
Bush and his inner circle of how to pump up the econonmy during a presidential election
year. According to the received wisdom of Bush and his milieu, pumping up the economy
was what Eisenhower neglected to do for Nixon in 1960, destroying the latter's hopes of
winning the election. Let us not forget Bush's Nixonian pedigree. Bush would also recall
how the depressed 1976 economy facilitated the Carter takeover.
Bush would thus recall what Nixon is believed in these circles to have done during 1971-
72: these were the years in which Nixon became a professed advocate of Keynesian
pump-priming, flooding the system with liquidity and government contracts to create an
electoral updraft for 1972. In conformity with this profile, Bush and Brady have been
urging the Federal Reserve to lower interest rates for most of 1990-91. The Fed has
responded with 5 cuts of the discount rate during 1991, lowering it from 7% to 4.5% The
federal funds rate dropped from 8.25% in July 1990 to about 4.75 in the late autumn of
- According to Brady, who cannot seem to talk interest rates down fast enough, such
cuts "will provide stimulus for economic growth, spur incentive for business investment,
and increase consumer confidence." [fn 6] By bringing the Fed's interest rates back to the
levels that prevailed under Nixon 19 years ago, Bush imagines that he will enjoy the
same political dividends collected in 1972 by Tricky Dick.
But Bush and Brady are ignoring how much times have changed. Nixon inherited a US
economy that was still near the peak of its postwar powers, and this provided him with a
multiplicity of options which have long since ceased to exist. Bush's problem today is
reflected in the fact that a drop in shot-term interest rates of 3.5% engineered by the Fed
has translated into a decrease in a mere one percent or even less in interest rates for
unsecured personal bank loans. Bush has complained that all the Fed's interest rate cuts
have failed to make credit any easier, and has failed to balloon the money supply in the
way Bush desires. The reason for the difficulty is that the banking system is bankrupt
several times over. The cheaper credit offered by the Fed is totally consumed by the
banks themselves, which are seeking to conceal the extent of their insolvency for as long
as possible. The US banking system now resembles the legendary black holes of outer
space: credit entering them from the government side will never re-emerge on the side of
business and production, assuming there were any of the latter left to finance. In the late
autumn of 1972, this black hole appeared capable of fagocitating all the credit the Fed
could generate, while the banks remained bankrupt as before.
This left Bush with his preferred option, a new foreign war. Advisers have been telling
him that the way to deal with the economy is to "Desert-Storm it"; Bush is inclined to
take that advice literally. We have seen how the market crashes of September-October