Over the last 24 hours there have been some important admissions of defeat and cluelessness on the part of those that have presumed for years to know how to fix our economy by fiat with debunked economic theories.

Federal Reserve Out Of Ideas

First up we have Federal Reserve Chairman Ben Barnanke's comments:

Bernanke said at a news conference that the slowdown could be due, in part, to the depressed housing market and other factors that aren't likely to fade soon.

"We don't have a precise read on why this slower pace of growth is persisting," Bernanke said. "Maybe some of the headwinds that have been concerning us, like the weakness in the financial sector, problems in the housing sector ... some of the headwinds may be stronger and more persistent than we thought."

The first thing of note is that the Chairman of the Federal Reserve--after years of printing trillions of dollars to buy trillions in toxic assets and U.S. debt (but I repeat myself)--has admitted that he doesn't really know why the economy is still moving slowly.

The second thing of note is that he's now admitting that some of the "headwinds may be stronger and more persistent" than they thought. That might make some of us nervous as to whether or not the Fed really has a good grasp on what they had deemed to be temporary inflation.

The third thing to note is that the combination of these two matters--that they don't know why the economy isn't recovering and admitting that they may have miscalculated the state of the economy and/or the effect of their policies--is a tacit admission that not only have their policies not worked, but that they apparently didn't even know what was going on enough to begin to formulate policies that could work.

After all, if after two years they still don't know why the economy is moving slowly, what are the chances they really can implement working policies today--let alone a couple years ago when they started wildly printing money?

Democrats Out Of Ideas

That Democrats are out of ideas, too, is evidenced in their plea for more stimulus:

Democrats in the U.S. Senate on Wednesday called on Vice President Joe Biden to include new economic stimulus spending in deficit-reduction talks as a way of lowering the 9.1 percent jobless rate that is hobbling the economic recovery.

Ignoring the audacity of Democrats in asking for more spending to be part of deficit-reduction talks, the fact of the matter is that we have--at their insistence--already spent trillions of dollars in stimulus over the last three years and it has not worked.

The only idea Democrats have is one that hasn't worked. So naturally they want to try it again.

Zombie Economy

So now we're in Obama's zombie economy which refuses to recover. The Federal Reserve has maintained short-term interest rates at nearly zero for almost three years. It's printed money on and off for over two years. And Keynesians in the presidency and Congress have forced us to spend trillions of dollars in "stimulus." They've attempted to bailout homeowners to save the housing industry.

Yet unemployment is higher now than when they started. Housing prices, sales, and starts are lower than when they started, and there are still millions of foreclosures in the pipeline. But what is higher is inflation and the national debt.

They're clearly out of ideas. The Federal Reserve has effectively admitted as much, and the stubborn Keynesians have tacitly admitted the same thing by pleading for more of the same stimulus spending that hasn't worked.

Wrong Economic Theory

The reason that nothing has worked--and why these politicians and supposed economic experts are now completely mystified and without answers, and why it seems every economic headline is "unexpected"--is because they're all operating under the same patently wrong "progressive" economic theories that got us into this mess in the first place.

After all, how can we expect these "experts" to solve our economic problems if their understanding of economics is fundamentally wrong? That's like asking someone that believes the earth is flat to design a space shuttle capable of orbiting the earth. There's just no way any solution they come up with is going to work because their underlying understanding of the nature of the problem is wrong.

The problems we have are:

• Too much debt
  
• Too much spending, especially of borrowed money
  
• Too much government interference
  
• Too much uncertainty
  
• Too much money printing

Everything President Obama, Chairman Bernanke, and Democrats in Congress have done--and want to do--aggravate each of these problems.

We aren't going to solve a debt problem with more debt. We're not going to solve a problem of borrowing and spending money by borrowing and spending more money. We're not going to solve problems of government interference with more government interference. We aren't going to solve the problem of uncertainty with ever evolving government intervention and interference in the economy that breeds more uncertainty. And we aren't going to solve the problem of printing money by printing more money.

If the economic model in which Obama, Bernanke, and congressional Democrats believe were accurate, their solutions would have already worked. The reason their solutions haven't worked is because their economic model is simply wrong.

Time For the Right Economic Model

Since the Federal Reserve was created and unleashed the "progressive century" on America and the world, we have tried the same thing over and over. Borrowing. Spending. Taxing. Spending. And we are where we are.

What we haven't tried is a return to the limited government that the founding fathers enshrined in the Constitution, and which served our country well for nearly 130 years. Only when we departed from limited government--and the Federal Reserve enabled us to spend beyond our means for a sustained period--did we go further and further into debt and reach the point at which we are at today.

We've tried everything the liberals have wanted to try for nearly 100 years and it hasn't worked. And if we push it any further and refuse to take corrective action, it will collapse spectacularly.

We've tried it the liberal way for a century and we're bankrupt.

Now it's time to try a conservative approach rooted in smaller government, less spending, less debt, more fiscal responsibility, more individual responsibility, and more freedom.