Conservatives are comparing Reagan and Obama, noting that Reagan entered office with the country in an economic crisis with the attitude that government is the problem. Obama clearly has a much different, practically opposite approach.

But to be fair, this economic crisis is very different. Reagan fought an inflationary spiral largely caused by the government unwilling to bear the political pain to get it under control. Reagan was willing and his solution entailed the recession of 1981-82, but the ultimate response was a twenty year economic boom.

President Obama is facing a very different situation with a severe financial crisis that most see as a problem largely brought on by greed and incompetence in the private sector. One could argue, as I often have, that the government also contributed significantly to this mess, but one can not ignore the failures in the private sector.

Obama has the troublesome task of avoiding a monetary collapse, which was largely accomplished, at least for the time being, with the TARP program and the forced mergers of 2008, trying to contain the recession, while avoiding the inflation that plagued us for two decades.

It appears to me that the party in power is using the crisis for political gain, but that is not the larger problem that is looming. Giving away money you do not have is easy.

The problem comes when you have to avoid the inflation that results from the kind of monetary growth we now have. It involves cutting back of the very programs that they are now funding in the so called Stimulus package, plus the large entitlement debts that are looming.

Any faith I have in this administration is based on their ability and commitment to keep the country from entering an inflationary spiral. We are getting relief now from the deflationary impact of lower fuel and commodity prices, and by the fact that as weak as our economy is most of the major world economies are worse. For the time being there is no safe haven and that is good for the dollar… for now.

But Obama’s reckoning with inflation is on the horizon. His ultimate success will come if he wins that battle.

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