Barack Obama and Ben Bernanke both addressed Congress and the American people this week. Each laid out their plans for what it will take to get the U.S. and world economies back on track and put this recession turned depression behind us. Feeling rather optimistic, Bernanke said that 2010 could be a “year of recovery” if only President Obama can succeed in fixing the financial system.

So what plans did Obama unveil to do so? Well, he definitely started off on the right foot, when he zeroed in on the problem:

“We managed to spend more money and pile up more debt, both as individuals and through our government, than ever before. In other words, we have lived through an era where too often, short-term gains were prized over long-term prosperity; where we failed to look beyond the next payment, the next quarter, or the next election.”

But instead of focusing on long-term prosperity, Obama’s “solution” is simply more of the same. And if ever “short-term gains were prized over long-term prosperity” it is in Obama’s economic plan. He should have been dishing out a dose of tough love, suggesting that the way out of this mess involves increasing our savings, reducing our debt, working hard, taking responsibility and rebuilding our manufacturing base.

Instead, he promised to solve our economic problems by employing the very same things that caused the problem in the first place. Bernanke and Obama both suggest that our only hope of recovery rests on unblocking the lending markets (more borrowing) and “stimulating” the economy (more spending).

Call me crazy, but I don’t think you can solve a debt crisis by going further into debt. Nor do I believe a bankrupt government can bail out a bankrupt banking system. Instead, I believe the real solution – the long-term solution – involves letting nature take its course. It would mean allowing the capital markets to do what they do best, re-allocating capital from those who squander it well and manage it poorly, to those who manage it conservatively and use it productively.

It is a process known as creative destruction, where businesses and banks are allowed to fail if they cannot stand on their own, and where equilibrium prices are truly discovered. This would set a floor, a firm foundation on which future, sustainable growth could take root.

But this process would involve pain – perhaps a lot of pain – today. Instead, politicians will do what they have always done. Kick the can down the road. Instead of focusing on what is right and what is best in the long term, they will focus on what is most expedient and what involves the least pain sacrifice today. With this attitude, is it any wonder we are in the position we are in?

What we are doing to our children and grandchildren is unconscionable. Over the past several decades, we have already burdened future generations with massive liabilities. With what we have added in the last year, we have ensured that those debts are mathematically impossible to pay. The only “solution” is to print more and inflate away those debts. So those who have saved are penalized as the dollar is destroyed.

Don’t get me wrong. I am certainly not suggesting that our current situation is Barack Obama’s fault… or even George Bush’s for that matter. Our system was built to fail from the very start. It has just taken a century for the crumbling to take place. When you have a system where the only way money can be introduced into circulation is through lending, then eventually debt will become unsustainable. This process of destruction started in 1913, when Congress gave the power to create money to a private banking interest. It won’t end until that yoke is thrown off.

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