I am a Town committee-person for the GOP and so carry petitions. I had called twenty people in the tiny district of Olivebridge, which isn't really a village. Olivebridge was gutted when New York City built the Ashokan Reservoir about 100 years ago and now it is dispersed streets and roads which are extremely rural. Moreover, many of the residents are transplanted New York City people, often who have second homes there. Thus, it is about 35%-25% Democratic-Republican. As a result, it is difficult to find people to sign the petitions.
Judiciously I saved the names I collected last year. Of the twenty, so far I have found that at least five or six have moved away, at least 25% (the majority have not been at home when I called). I spoke to a retired IBM worker who told me that his daughter, who had lived next door (she and her husband had signed my petition last year), had moved to Virginia for job reasons. He also mentioned that in 35 years his son in law had not been able to live at home also for job reasons. They can now live together in Virginia. IBM, of course, had closed its Kingston plant where Steve worked in the early 1990s. Steve mentioned that his daughter's children could not stay in Olive because of lack of job opportunity.
This was not the only instance of petition-disappearance as there were numerous "dead" phone lines. New York State's destruction of its economy is mirrored in miniature here. The people of Olivebridge continue to vote for policies that destroy their neighbors' lives.
The retired IBMer enjoys the upside of depopulation as well. As families have fled New York's crippled economy, the beneficiaries of Federal Reserve Bank monetary expansion, business owners, Wall Street bankers and government employees, have bought the houses vacated by former Olive residents. His neighbor is a now a multi-millionaire. His neighbor and his wife took a shine to him and now they fly him to Germany and Florida for vacations. That's a nice bonus, but it probably doesn't really make up for his daughter's being forced to move hundreds of miles away because of lack of jobs.
Showing posts with label economy. Show all posts
Showing posts with label economy. Show all posts
Sunday, June 20, 2010
Friday, June 4, 2010
Democrats, Progressive Republicans Take Sledge Hammer to Economy
Bloomberg reports that the economy is in a tailspin. The unemployment rate is now 9.7%, 0.2% lower than last month, but that statistic deceives. Last month, there were 431,000 new jobs with 411,000 census workers hired. Only 41,000 private sector workers were hired. Manufacturing jobs increased by 29,000 while service jobs, mostly temporary, increased by 27,000. The retail job number fell.
The labor force fell by over 200,000. A statistical characteristic of the unemployment rate is that people not in the labor force are not counted in the unemployment rate. So if you give up looking for a job you are not counted. 200,000 left in response to the policies of Obama and the Democrats. They are so great at helping the average American.
Now if you subtract the 200,000 who left the labor force and the 411,000 temporary census jobs from the 431,000 new jobs, do you really find an improvement in unemployment?
The truth is that the unemployment rate is too low. The reason is that the government has subsidized badly run businesses that should be terminated and much of government is pure waste. Rather than subsidize and stimulate waste as the Democrats have, the incompetently run businesses need to close.
Money should have been spent on welfare subsidies to the unemployed, whose lives have been upended by the incompetence of the Progressive/Keynesian economic system. Instead, the economy has been put on life support and the misallocation of investment will cause continued decline until the Democrats and Progressive Republicans are booted out of office.
I feel sorry for my students, who look forward to suffering economically because of the moron whom they voted into office, Barack Obama.
The labor force fell by over 200,000. A statistical characteristic of the unemployment rate is that people not in the labor force are not counted in the unemployment rate. So if you give up looking for a job you are not counted. 200,000 left in response to the policies of Obama and the Democrats. They are so great at helping the average American.
Now if you subtract the 200,000 who left the labor force and the 411,000 temporary census jobs from the 431,000 new jobs, do you really find an improvement in unemployment?
The truth is that the unemployment rate is too low. The reason is that the government has subsidized badly run businesses that should be terminated and much of government is pure waste. Rather than subsidize and stimulate waste as the Democrats have, the incompetently run businesses need to close.
Money should have been spent on welfare subsidies to the unemployed, whose lives have been upended by the incompetence of the Progressive/Keynesian economic system. Instead, the economy has been put on life support and the misallocation of investment will cause continued decline until the Democrats and Progressive Republicans are booted out of office.
I feel sorry for my students, who look forward to suffering economically because of the moron whom they voted into office, Barack Obama.
Sunday, May 9, 2010
Washington's War on Men
Wall Street Journal editor David Wessel says on this video, which I picked up from Market Watch, that even when the economy recovers Larry Summers expects one in six men to remain permanently unemployed. This would likely be among the less educated and lower income. In another Market Watch article Eleanore Goldberg points out that single women purchasing homes outnumber single men purchasing homes two to one.
The Federal Reserve Bank's policies have harmed low-wage workers, squeezing their pay through inflation while subsidizing investment and commercial banks through monetary creation. I am not so clear why women should be outperforming men in America's declining economy, declining because finance has been massively subsidized at the expense of innovation and hard work.
Men need to make more efforts to learn marketable skills, obviously. Perhaps false expectations have deluded many men, whereas women have tended to assume that they are at a disadvantage and so tried harder. America increasingly strikes me as a place much less desirable in which to live than it was several decades ago when, say, I entered college. I did not dream that so much decline would occur so fast. Big government and a socialized economy, the policies that American universities advocate, have hammered America into the dust.
Americans need to wake up to the decline and end the socialism with which Washington has harmed so many.
The Federal Reserve Bank's policies have harmed low-wage workers, squeezing their pay through inflation while subsidizing investment and commercial banks through monetary creation. I am not so clear why women should be outperforming men in America's declining economy, declining because finance has been massively subsidized at the expense of innovation and hard work.
Men need to make more efforts to learn marketable skills, obviously. Perhaps false expectations have deluded many men, whereas women have tended to assume that they are at a disadvantage and so tried harder. America increasingly strikes me as a place much less desirable in which to live than it was several decades ago when, say, I entered college. I did not dream that so much decline would occur so fast. Big government and a socialized economy, the policies that American universities advocate, have hammered America into the dust.
Americans need to wake up to the decline and end the socialism with which Washington has harmed so many.
Saturday, April 17, 2010
The Democratic Party's Stimulus Has Failed
The Ways and Means Republicans have released the numbers below via e-mail. While Mr. Obama and his colleagues claimed that there would be across the board job increases following the stimulus, one year later there have been across the board losses in job numbers. I wonder how their assumptions about the fianncial impact of health care will turn out. In the 1930s and 1970s the Democrats claimed that Social Security would pay for itself. The Baby Boomers believed them in the 1980s. Now, they see diminution of their retirement prospects. How much socialist lying ought America tolerate? How many failed programs? How much waste? How much ignorance?
Monday, August 31, 2009
Work Is for Chumps
In the nineteenth century Americans were taught to rely on themselves and to build a better mousetrap. Although we were much poorer then, progress was rapid. In the late nineteenth century, although the average American was more than twice as well off as at the beginning, there had been an expansion of government related to the growth of big business (this began with the Dred Scott decision, which asserted federal power to regulate the states) and, in large part due to the expanding press of that day, the public saw the affluence of corrupt big businessmen like Jay Gould and John D. Rockefeller as resulting from power rather than innovation. While there was a high degree of corruption then, though no more than there is now, the solution would have been to limit state power to grant land and benefits to private companies. Rather than follow that route, big business interests, reflected by Theodore Roosevelt and his advisers in the National Civic Federation, including George Perkins, a Morgan associate and executive of US Steel and International Harvester, convinced the public that increased government redistribution was necessary for a properly functioning economy.
The result was a ten decade long reduction in the rate of innovation. But Roosevelt-Wilson Progressivism wasn't enough. Theodore's cousin Franklin shifted the rhetoric of progressivism by introducing the rhetoric of fascist redistribution from rich to poor. Much like the Roman system on which fascism modeled itself, the New Deal aimed to shore up the wealthy but to do so in the cloak of free bread and olive oil. This was accomplished using the ideology of Keynesian economics and state activist "liberalism". Franklin D. Roosevelt's New Deal was a recreation of the Roman model of a state controlled, replicative system. Thus, the innovation that occurred after World War II took the "scale" concept that the 19th century had discovered using free market processes and applied it to a far greater degree. It was able to do this because of government subsidization and stabilization of big business. However, there were two effects that the American fascists in the Democratic Party did not want but could not avoid. First, the system caused the rate of innovation to decline. While in the 1960s Americans could still imagine flying cars (as in the children's cartoon "The Jetsons") today we are happy to get cash for clunkers. Second, the system eventually caused real wages to stagnate as it increasingly reflected special interest pressure on the Federal Reserve and banking system to redistribute credit from the innovative to the government, banking and big business sectors. This was also accomplished through high taxes (middle class Americans now pay half their income to the black hole of government waste) as well as Federal Reserve monetary expansion.
The result has increasingly been that those who create wealth are poorly paid and those who do consume it are well paid. That trend has been present since the creation of the greenbacks following the Civil War, and was also associated with both the First and Second banks in the early 19th century.
The result is that people who work hard and create wealth have seen their pay stagnate, while those who play the stock market, consume resources through law suits and are on the government payroll have seen their pay increase.
The election of Barack Obama is a reassertion of New Deal fascism and we can expect increasing efforts to redistribute wealth from those who work to those who do not. This is not a trend that a small number of hard working people can reverse. Ayn Rand had the solution in her book Atlas Shrugged: stop working.
Anyone who works to produce wealth in today's America is a chump. Go on government welfare. This is a socialist/fascist state. Only fools work hard.
The result was a ten decade long reduction in the rate of innovation. But Roosevelt-Wilson Progressivism wasn't enough. Theodore's cousin Franklin shifted the rhetoric of progressivism by introducing the rhetoric of fascist redistribution from rich to poor. Much like the Roman system on which fascism modeled itself, the New Deal aimed to shore up the wealthy but to do so in the cloak of free bread and olive oil. This was accomplished using the ideology of Keynesian economics and state activist "liberalism". Franklin D. Roosevelt's New Deal was a recreation of the Roman model of a state controlled, replicative system. Thus, the innovation that occurred after World War II took the "scale" concept that the 19th century had discovered using free market processes and applied it to a far greater degree. It was able to do this because of government subsidization and stabilization of big business. However, there were two effects that the American fascists in the Democratic Party did not want but could not avoid. First, the system caused the rate of innovation to decline. While in the 1960s Americans could still imagine flying cars (as in the children's cartoon "The Jetsons") today we are happy to get cash for clunkers. Second, the system eventually caused real wages to stagnate as it increasingly reflected special interest pressure on the Federal Reserve and banking system to redistribute credit from the innovative to the government, banking and big business sectors. This was also accomplished through high taxes (middle class Americans now pay half their income to the black hole of government waste) as well as Federal Reserve monetary expansion.
The result has increasingly been that those who create wealth are poorly paid and those who do consume it are well paid. That trend has been present since the creation of the greenbacks following the Civil War, and was also associated with both the First and Second banks in the early 19th century.
The result is that people who work hard and create wealth have seen their pay stagnate, while those who play the stock market, consume resources through law suits and are on the government payroll have seen their pay increase.
The election of Barack Obama is a reassertion of New Deal fascism and we can expect increasing efforts to redistribute wealth from those who work to those who do not. This is not a trend that a small number of hard working people can reverse. Ayn Rand had the solution in her book Atlas Shrugged: stop working.
Anyone who works to produce wealth in today's America is a chump. Go on government welfare. This is a socialist/fascist state. Only fools work hard.
Tuesday, August 4, 2009
Democrats' and Republicans' Impoverishment Plans
The Democrats have this impoverishment plan:
1. Teach children that production of wealth is immoral while taxation is moral.
2. Tax output of productive Americans and redistribute it to the wealthy-–George Soros, Long Term Capital Management, Bear Stearns, the Washington nomenclatura, university professors and Keynesian economists.
3. Tell the poor that you are acting in their interest because of your “conscience”. Develop a social security and medicare plan that redistributes wealth inter-generationally from low wage earner to low wage earner. When it fails, institute a rationing scheme, call it “national health insurance” and raise the social security retirement age.
4. Convince Americans that receiving $180,000 in social security benefits for $200,000 in out-of-pocket contributions is a good deal. Convince Americans that health care in Cuba at $250 per year is better than in America.
5. Set interest rates at zero so that middle income people cannot save and induce them to invest in the stock market at inflated prices. Further ensure that middle income people cannot save by taxing incomes, property, inheritance, capital gains and sales.
6. Allocate freshly printed money (created to reduce interest rates to zero) to unproductive Wall Street, banking, hedge fund and corporate executives, insuring that wage earners will pay higher prices for milk while hedge fund managers buy $30 million houses in Greenwich, Connecticut and the Dakotas. Facilitate this process through subsidization of the stock and real estate markets, repeatedly inducing long term “sucker rallies”.
7. Convince Americans that taxation of 50% of your income is too little for the same level of services that used to be provided at 10% of your income.
8. Increase tax rates most on innovative and harder working Americans and transfer their money to Democratic contributors.
But the Republicans also have an impoverishment plan.
1. Read and parrot all Democratic Party information sources such as the New York Times and CNN.
2. Never repeal the Democrats’ impoverishment plan.
3. Do not educate Americans as to the effects of the Democrats’ impoverishment plan.
4. When elected, spend more than Democrats.
5. Declare a national emergency and emphasize the need to transfer even more printed money to unproductive, wealthy interests six weeks before the presidential election.
1. Teach children that production of wealth is immoral while taxation is moral.
2. Tax output of productive Americans and redistribute it to the wealthy-–George Soros, Long Term Capital Management, Bear Stearns, the Washington nomenclatura, university professors and Keynesian economists.
3. Tell the poor that you are acting in their interest because of your “conscience”. Develop a social security and medicare plan that redistributes wealth inter-generationally from low wage earner to low wage earner. When it fails, institute a rationing scheme, call it “national health insurance” and raise the social security retirement age.
4. Convince Americans that receiving $180,000 in social security benefits for $200,000 in out-of-pocket contributions is a good deal. Convince Americans that health care in Cuba at $250 per year is better than in America.
5. Set interest rates at zero so that middle income people cannot save and induce them to invest in the stock market at inflated prices. Further ensure that middle income people cannot save by taxing incomes, property, inheritance, capital gains and sales.
6. Allocate freshly printed money (created to reduce interest rates to zero) to unproductive Wall Street, banking, hedge fund and corporate executives, insuring that wage earners will pay higher prices for milk while hedge fund managers buy $30 million houses in Greenwich, Connecticut and the Dakotas. Facilitate this process through subsidization of the stock and real estate markets, repeatedly inducing long term “sucker rallies”.
7. Convince Americans that taxation of 50% of your income is too little for the same level of services that used to be provided at 10% of your income.
8. Increase tax rates most on innovative and harder working Americans and transfer their money to Democratic contributors.
But the Republicans also have an impoverishment plan.
1. Read and parrot all Democratic Party information sources such as the New York Times and CNN.
2. Never repeal the Democrats’ impoverishment plan.
3. Do not educate Americans as to the effects of the Democrats’ impoverishment plan.
4. When elected, spend more than Democrats.
5. Declare a national emergency and emphasize the need to transfer even more printed money to unproductive, wealthy interests six weeks before the presidential election.
Tuesday, June 16, 2009
Rise and Decline of Hellenistic Monarchies
Recently, Newsweak featured a headline claiming that "We Are All Socialists Now." Perhaps it should have featured a picture of Demetrius Poliorcetes on the cover instead. The history of the ancient Hellenistic cities in what is now Arabia and Turkey might provide more useful knowledge about what is happening in the United States now than one can find in newspapers, magazines or on television.
Michael Rostovtzeff was a Ukrainian-born archaeologist and professor of ancient history at Yale beginning in 1925. He died in 1952. He was among the first historians to study the ancient world's economies and to emphasize the role of capitalism in the rise and decline of ancient societies.
I have just started reading Rostovtzeff's monumental Social and Economic History of the Roman Empire*, one of a number of massive books that he authored. The text runs to 488 pages but there are in addition more than 200 pages of footnotes. Friends of liberty will do well to consider Rostovtzeff's work.
He starts the book by discussing the history of Greece and the Hellenistic city states that Greeks founded in what is now Arabia and Turkey. He notes that "class warfare" was common in the Greek city states and in Greece proper. "This class-war made the growth and development of a sound capitalistic system very difficult." There were widespread movements for redistribution of land and abolition of debts. The problem was so widespread that Athens and Itana in Crete required citizens to swear that they would not put redistribution of land and abolition of debts to the vote.
Rosttovtzeff writes:
"Revolution and reaction followed each other with brief delays, and were marked by wholesale slaughter or expulsion of the best citizens...What was lost by the Greek cities of the European mainland and most of the islands was gained by the Hellenistic monarchies and more especially by the Greek cities of the East."
The eastern Hellenistic kings of the fourth and third centuries BC were anti-libertarian capitalists, much like more recent rulers of Chile and post-Mao China. "The result was that every attempt at a social revolution within their gates was stopped by the strong hand of the Hellenistic monarchs, and that the cities were very rarely involved in external warfare."
The kings' suppression of revolution had a libertarian effect, at least temporarily. "The accumulation of capital and the introduction of improved methods in trade and industry proceeded more freely and successfully in the East than in the cities of Greece proper. Hence the commercial capitalism of the Greek cities of the fourth century attained an ever higher development, which brought the Hellenistic states very near to the stage of industrial capitalism that characterizes the economic history of Europe in the nineteenth and twentieth centuries."
That is mind blowing. In the fourth and third centuries BC Greeks in Asia Minor were attaining 19th century levels of industrialization? In other words, from the year 300BC until 1900 virtually no consistent economic progress was made? And how easy might it be to revert to the decline that followed the fall of the Roman Empire roughly 1500 years ago? True, these societies depended on slave labour. But recall that the American economy also so depended until 1862.
Rostovtzeff notes that the Greek cities not only had a large internal market and a large, competitive trade, but also:
"They gradually improved the technique of agricultural and of industrial production with the aid of pure and applied science...and they employed both in agriculture (including cattle-breeding) and in industry the methods of pure capitalistic economy based on slave-labour. They introduced for the first time a mass production of goods for an indefinite market. They developed banking and credit and succeeded in creating not only general rules for maritime commerce...but also a kind of common civil law, which was valid all over the Hellenistic world. The same tendency towards unification may be noticed in attempts to stabilize the currency, or at least to establish stable relations between the coins of the various independent trading states."
These impressive advances, a globalization that occurred nearly 2,500 years ago, very quickly "stunted" and then was "atrophied" by "constant warfare which raged almost without interruption all over the Hellenistic world." "The wars forced the Hellenistic states, both great and small, to concentrate their efforts on military preparations, on building up the largest possible armies and navies, on inventing new devices in military engineering, and thus wasting enormous sums of money as, for instance, in the case of the siege of Rhodes by Demetrius Poliorcetes."
Rostovtzeff notes that this led to:
"Nationalization of both production and exchange, which was carried out in some, at least, of the Hellenistic monarchies, especially Egypt. By nationalization I mean the concentration of the management of the most essential branches of economic activity in the hands of the state, that is to say, of the king and his officials. Profitable at first for the state, this system gradually led to dishonesty and lawlessness on the part of the officials and to the almost complete elimination of competition and of the free play of the individual energy on the part of the population.
"Hand in hand with this tendency towards state control went the minute elaboration of a highly refined system of taxation, which affected every side of economic life. It was based on the experience of the Oriental monarchies, but it went much farther both in inventing new taxable objects and in improving the mode of collecting the taxes. The burden of taxation lay heavily on the population of the Hellenistic world...
"This disastrous economic system of the Hellenistic monarchies produced ever-growing discontent among the masses of the natives. From the end of the third century onwards the native population of Egypt, for example, rose repeatedly against its foreign oppressors..."
Naturally, the warfare and economic dislocations due to taxes and socialism in the Greek world opened the city gates to a rising new imperial power: Rome. Might the United States' ever-expanding government spending; subsidization of corrupt and inefficient financial institutions and corporations; and its military-industrial complex open the door to the ascendancy of a new power, this time from the East?
*All quotes in this blog are taken from chapter 1, "Italy and the Civil War".
Michael Rostovtzeff was a Ukrainian-born archaeologist and professor of ancient history at Yale beginning in 1925. He died in 1952. He was among the first historians to study the ancient world's economies and to emphasize the role of capitalism in the rise and decline of ancient societies.
I have just started reading Rostovtzeff's monumental Social and Economic History of the Roman Empire*, one of a number of massive books that he authored. The text runs to 488 pages but there are in addition more than 200 pages of footnotes. Friends of liberty will do well to consider Rostovtzeff's work.
He starts the book by discussing the history of Greece and the Hellenistic city states that Greeks founded in what is now Arabia and Turkey. He notes that "class warfare" was common in the Greek city states and in Greece proper. "This class-war made the growth and development of a sound capitalistic system very difficult." There were widespread movements for redistribution of land and abolition of debts. The problem was so widespread that Athens and Itana in Crete required citizens to swear that they would not put redistribution of land and abolition of debts to the vote.
Rosttovtzeff writes:
"Revolution and reaction followed each other with brief delays, and were marked by wholesale slaughter or expulsion of the best citizens...What was lost by the Greek cities of the European mainland and most of the islands was gained by the Hellenistic monarchies and more especially by the Greek cities of the East."
The eastern Hellenistic kings of the fourth and third centuries BC were anti-libertarian capitalists, much like more recent rulers of Chile and post-Mao China. "The result was that every attempt at a social revolution within their gates was stopped by the strong hand of the Hellenistic monarchs, and that the cities were very rarely involved in external warfare."
The kings' suppression of revolution had a libertarian effect, at least temporarily. "The accumulation of capital and the introduction of improved methods in trade and industry proceeded more freely and successfully in the East than in the cities of Greece proper. Hence the commercial capitalism of the Greek cities of the fourth century attained an ever higher development, which brought the Hellenistic states very near to the stage of industrial capitalism that characterizes the economic history of Europe in the nineteenth and twentieth centuries."
That is mind blowing. In the fourth and third centuries BC Greeks in Asia Minor were attaining 19th century levels of industrialization? In other words, from the year 300BC until 1900 virtually no consistent economic progress was made? And how easy might it be to revert to the decline that followed the fall of the Roman Empire roughly 1500 years ago? True, these societies depended on slave labour. But recall that the American economy also so depended until 1862.
Rostovtzeff notes that the Greek cities not only had a large internal market and a large, competitive trade, but also:
"They gradually improved the technique of agricultural and of industrial production with the aid of pure and applied science...and they employed both in agriculture (including cattle-breeding) and in industry the methods of pure capitalistic economy based on slave-labour. They introduced for the first time a mass production of goods for an indefinite market. They developed banking and credit and succeeded in creating not only general rules for maritime commerce...but also a kind of common civil law, which was valid all over the Hellenistic world. The same tendency towards unification may be noticed in attempts to stabilize the currency, or at least to establish stable relations between the coins of the various independent trading states."
These impressive advances, a globalization that occurred nearly 2,500 years ago, very quickly "stunted" and then was "atrophied" by "constant warfare which raged almost without interruption all over the Hellenistic world." "The wars forced the Hellenistic states, both great and small, to concentrate their efforts on military preparations, on building up the largest possible armies and navies, on inventing new devices in military engineering, and thus wasting enormous sums of money as, for instance, in the case of the siege of Rhodes by Demetrius Poliorcetes."
Rostovtzeff notes that this led to:
"Nationalization of both production and exchange, which was carried out in some, at least, of the Hellenistic monarchies, especially Egypt. By nationalization I mean the concentration of the management of the most essential branches of economic activity in the hands of the state, that is to say, of the king and his officials. Profitable at first for the state, this system gradually led to dishonesty and lawlessness on the part of the officials and to the almost complete elimination of competition and of the free play of the individual energy on the part of the population.
"Hand in hand with this tendency towards state control went the minute elaboration of a highly refined system of taxation, which affected every side of economic life. It was based on the experience of the Oriental monarchies, but it went much farther both in inventing new taxable objects and in improving the mode of collecting the taxes. The burden of taxation lay heavily on the population of the Hellenistic world...
"This disastrous economic system of the Hellenistic monarchies produced ever-growing discontent among the masses of the natives. From the end of the third century onwards the native population of Egypt, for example, rose repeatedly against its foreign oppressors..."
Naturally, the warfare and economic dislocations due to taxes and socialism in the Greek world opened the city gates to a rising new imperial power: Rome. Might the United States' ever-expanding government spending; subsidization of corrupt and inefficient financial institutions and corporations; and its military-industrial complex open the door to the ascendancy of a new power, this time from the East?
*All quotes in this blog are taken from chapter 1, "Italy and the Civil War".
Thursday, March 19, 2009
Nancy Razik Foresees Riots--Recommends Stocking Food
I just received the following e-mail from Nancy Razik. I live in a rural area in upstate New York which is unlikely to see riots (except by a few horses in West Shokan). But apocalyptic fears do not surprise me. The United States has foresaken its links with the moral and intellectual vision that the founding fathers established. The quack Keynesian theories that reflect banking interests and the opportunism of state-based looting have become the dominant value bases on which Congress and the President govern. Limited government has been replaced by government by subsidy to bank. The banks that dominate the economy are incompetently and unethically run. Yet, America continues to benefit from massive global subsidies via the dollar's being viewed as a universal currency. Despite this advantage, which emanated from the US's being the last nation to drop the gold standard in the early 20th century, the Federal Reserve bank has potentially quadrupled the number of dollars in circulation during the past six months (that's not an exaggeration). Those who hold dollars, CDs and bonds will be harmed, and there is no reason to think that the world's dollar holders will simply accept abuse of this kind. A 75% or more fall in the dollar accompanied by Barack Obama's massive redistribution of wealth to Wall Street and banking interests could result in a rapid inflation, cutting Americans' living standards. This will affect those who hold dollars or who depend on wages the most because wages tend to lag inflation. Contracts cannot be renegotiated quickly enough in a highly inflationary period. Employment relations will become undesirable as employees find that they can profit more from selling apples or pencils on the street than from working for a fixed salary. This occurred in Germany during the 1930s.
For the past year I have heard repeated claims of "deflation". Yesterday I received a renewal from my long term care insurance. The insurance is updated each year for CPI increases. Despite montone media claims of deflation, the Metropolitan Life Insurance Company states that inflation over the past year has escalated to over 5 percent. In other words, the media coverage of this subject has been either (a) incompetent or (b) deceitful. Likely both. The media announcers on Fox (I won't mention CNN or Bloomberg, which are jokes) lack the ability to question the quack claims of university macro-economists. Despite the high inflation rate, network television and the major news outlets continue to claim that prices are going down. Anyone who relies on major news sources is a fool.
Nancy Razik and Lisa Karres wrote the following:
>I am bitterly disappointed that BO got into the White House, even though we had prophecies he would not... but I'm thinking back to one prophecy in particular that stated Bush would be the last president of the USA...
We know that BO is not the president ot the USA... he is a poser... he is, in fact, a usurper...based on his ineligibility... something to consider...
About Wilkerson's idea... he may be wrong also... but, getting a 30-day supply of food can never be a bad investment... because we will end up using the toilet paper, cans of ravioli and peaches, etc., either way, crisis or not... we have nothing to lose by being prepared...
I remember when our island was preparing for hurricane Iniki a few years back... I asked my then husband to please go to the store to stock up on essentials the night before the storm... he refused and blew me off saying the storm would bypass us like so many other storms had... I asked if he could guarantee 100% that we would not be hit... he could not guarantee that...
I said, tonight you can spend 20 minutes buying our essentials which we will use even if the hurricane does not hit us... or you can attempt to shop tomorrow after the storm... with hundreds of others waiting in line for gas and groceries... please do the right thing... I had to beg him and he finally did as I asked...
For those of you who already have your 30-Day food supply ~ Good Job!!!
--- On Thu, 3/12/09, Lisa Karres wrote:
From: Lisa Karres
Subject: RE: Store a 30-day supply of non-perishable food, toiletries and other essentials. In major cities, grocery stores are emptied in an hour.
To: nancyrazik@
Date: Thursday, March 12, 2009, 3:54 PM
Please do not misunderstand what I am about to say. I really have NOT lost my faith. But I think the Lord put it in perspective for me.
During the campaign, before the election, I was hearing from MANY sources (friends, bloggers, strangers, etc.) that the Lord was speaking to them in dreams. In visions. In near death experiences, etc. All with the same message, “Obama was not going to be elected.”
Then it was, “The Electoral College will not vote for him.”
Then it was, “Obama will not be inaugurated.”
Well, I don’t have to tell you, those messages did not happen and here we are in mid March – stuck with an illegal alien who is a Marxist, Socialist, Communist, etc.
I am not going to say that the Lord did not speak to Pastor Wilkerson, that would be too presumptuous of me.
I am just going to start looking towards the Cross and keep in His Holy Word, and keep praying.
I have been EXTREMELY discouraged and disappointed in man’s word.
In those dreams that didn’t come true.
In those visions that didn’t come true.
Thankfully, praise God, I have a very strong faith and I did not lash out to the Lord as breaking His promises.
A weak new Christian would have done that.
I saw this article. Maybe he is trying to reach the unsaved. I don’t know.
I have stock piled enough food for maybe 1 month for my family of 5. Less if my daughter’s family shows up on my door step.
Money and the room to store has prohibited me from purchasing more.
Now here is a question for you . . . is the food that I purchased for us Christians during the Tribulation OR
For the people that will break into my house to live and survive after I am gone with the Rapture?
I was joking with my friend, if it was for other people, then I would have purchased Mexican food.
Keep Well - LISA
From: Nancy Razik [mailto:nancyrazik@]
Sent: Thursday, March 12, 2009 4:48 PM
To: nancyrazik@
Subject: Store a 30-day supply of non-perishable food, toiletries and other essentials. In major cities, grocery stores are emptied in an hour.
Should We Heed Wilkerson's Warning?
http://www.worldnetdaily.com/
--------------------------------------------------------------------------------
When I was a kid, I read about David Wilkerson who took to Gospel to the gangs of New York. I even saw the movie "The Cross and the Switchblade" that was made about him. Many know about that, but most don't know what happened in his church just eight years ago.
In the fall of 2001, Pastor David Wilkerson, of Times Square Church in New York City, was warned by God that a calamity was coming. For six weeks they felt an intense burden and enormous heaviness. A critical need for intercession was so profound that Pastor Wilkerson canceled everything on the church calendar – mission's conferences, youth events and every guest speaker.
For six weeks, there wasn't a sermon. Instead, there was intercession for our nation with weeping and repentance. They knew something was coming and that something was bad. And that something was soon. So they prayed. And prayed … and prayed.
Then Wilkerson felt God telling him something that seemed rather bizarre. He felt God telling him to make sandwiches – lots of sandwiches. What were they for? Who would eat them? That part wasn't clear, but his church did what they believed God was telling them anyway.
And on the 10th of September they stayed up all night making hundreds and hundreds of peanut butter and jelly sandwiches. By morning they had about 2,000 sandwiches. At 8:46 a.m. the first plane hit the World Trade Center and Times Square Church was ready to feed and minister to rescue workers and victims of our nation's worst attack.
Making sandwiches all night is a strange thing to do. If someone told me to stay up all night making sandwiches, I'd probably tell them they were crazy. But if David Wilkerson says he's heard something from God today, I think we'd be crazy not to listen.
He now says he feels the same thing he felt leading up to the attack by radical Islam. In an "URGENT MESSAGE" dated March 7, 2009, Wilkerson said:
AN EARTH-SHATTERING CALAMITY IS ABOUT TO HAPPEN. IT IS GOING TO BE SO FRIGHTENING, WE ARE ALL GOING TO TREMBLE – EVEN THE GODLIEST AMONG US.
For 10 years I have been warning about a thousand fires coming to New York City. It will engulf the whole megaplex, including areas of New Jersey and Connecticut. Major cities all across America will experience riots and blazing fires – such as we saw in Watts, Los Angeles, years ago.
There will be riots and fires in cities worldwide. There will be looting – including Times Square, New York City. What we are experiencing now is not a recession, not even a depression. We are under God's wrath. In Psalm 11 it is written:
… God is judging the raging sins of America and the nations. He is destroying the secular foundations.
The prophet Jeremiah pleaded with wicked Israel, "God is fashioning a calamity against you and devising a plan against you. Oh, turn back each of you from your evil way, and reform your ways and deeds. But they will say, It's hopeless! For we are going to follow our own plans, and each of us will act according to the stubbornness of his evil heart" (Jeremiah 18:11-12).
In Psalm 11:6, David warns, "Upon the wicked he will rain snares (coals of fire) … fire … burning wind … will be the portion of their cup." Why? David answered, "Because the Lord is righteous" (v. 7). This is a righteous judgment – just as in the judgments of Sodom and in Noah's generation.
WHAT SHALL THE RIGHTEOUS DO? WHAT ABOUT GOD'S PEOPLE?
First, I give you a practical word I received for my own direction. If possible lay in store a 30-day supply of non-perishable food, toiletries and other essentials. In major cities, grocery stores are emptied in an hour at the sign of an impending disaster.
… I will behold our Lord on his throne, with his eye of tender, loving kindness watching over every step I take – trusting that he will deliver his people even through floods, fires, calamities, tests, trials of all kinds.
Note: I do not know when these things will come to pass, but I know it is not far off. I have unburdened my soul to you. Do with the message as you choose.
Warren Buffett has said that our economy has "fallen off a cliff." With the election of the most pro-abortion president (and Congress) in history, there's no question that we deserve God's judgment.
Just yesterday, Barack Obama signed an executive order to use children for spare parts. So much for defending the "least of these," as he so often quoted during his campaign. Cannibalizing the weak to help the strong. And by the way, don't believe everything you hear in the news – Obama didn't say he was against cloning. He said he was against "reproductive" cloning. Killing a new life after cloning one is another matter entirely: welcome to Obama's "Brave New World."
The bottom line is that we are economically and morally bankrupt. And it's reported that Iran now has all they need to build nukes.
So, when the guy who made the 2,000 sandwiches on Sept. 10 warns us: "AN EARTH-SHATTERING CALAMITY IS ABOUT TO HAPPEN," I think we would do well to heed it. And follow the words Wilkerson quotes from the prophet Jeremiah and "turn back each of you from your evil way, and reform your ways and deeds."
For the past year I have heard repeated claims of "deflation". Yesterday I received a renewal from my long term care insurance. The insurance is updated each year for CPI increases. Despite montone media claims of deflation, the Metropolitan Life Insurance Company states that inflation over the past year has escalated to over 5 percent. In other words, the media coverage of this subject has been either (a) incompetent or (b) deceitful. Likely both. The media announcers on Fox (I won't mention CNN or Bloomberg, which are jokes) lack the ability to question the quack claims of university macro-economists. Despite the high inflation rate, network television and the major news outlets continue to claim that prices are going down. Anyone who relies on major news sources is a fool.
Nancy Razik and Lisa Karres wrote the following:
>I am bitterly disappointed that BO got into the White House, even though we had prophecies he would not... but I'm thinking back to one prophecy in particular that stated Bush would be the last president of the USA...
We know that BO is not the president ot the USA... he is a poser... he is, in fact, a usurper...based on his ineligibility... something to consider...
About Wilkerson's idea... he may be wrong also... but, getting a 30-day supply of food can never be a bad investment... because we will end up using the toilet paper, cans of ravioli and peaches, etc., either way, crisis or not... we have nothing to lose by being prepared...
I remember when our island was preparing for hurricane Iniki a few years back... I asked my then husband to please go to the store to stock up on essentials the night before the storm... he refused and blew me off saying the storm would bypass us like so many other storms had... I asked if he could guarantee 100% that we would not be hit... he could not guarantee that...
I said, tonight you can spend 20 minutes buying our essentials which we will use even if the hurricane does not hit us... or you can attempt to shop tomorrow after the storm... with hundreds of others waiting in line for gas and groceries... please do the right thing... I had to beg him and he finally did as I asked...
For those of you who already have your 30-Day food supply ~ Good Job!!!
--- On Thu, 3/12/09, Lisa Karres
From: Lisa Karres
Subject: RE: Store a 30-day supply of non-perishable food, toiletries and other essentials. In major cities, grocery stores are emptied in an hour.
To: nancyrazik@
Date: Thursday, March 12, 2009, 3:54 PM
Please do not misunderstand what I am about to say. I really have NOT lost my faith. But I think the Lord put it in perspective for me.
During the campaign, before the election, I was hearing from MANY sources (friends, bloggers, strangers, etc.) that the Lord was speaking to them in dreams. In visions. In near death experiences, etc. All with the same message, “Obama was not going to be elected.”
Then it was, “The Electoral College will not vote for him.”
Then it was, “Obama will not be inaugurated.”
Well, I don’t have to tell you, those messages did not happen and here we are in mid March – stuck with an illegal alien who is a Marxist, Socialist, Communist, etc.
I am not going to say that the Lord did not speak to Pastor Wilkerson, that would be too presumptuous of me.
I am just going to start looking towards the Cross and keep in His Holy Word, and keep praying.
I have been EXTREMELY discouraged and disappointed in man’s word.
In those dreams that didn’t come true.
In those visions that didn’t come true.
Thankfully, praise God, I have a very strong faith and I did not lash out to the Lord as breaking His promises.
A weak new Christian would have done that.
I saw this article. Maybe he is trying to reach the unsaved. I don’t know.
I have stock piled enough food for maybe 1 month for my family of 5. Less if my daughter’s family shows up on my door step.
Money and the room to store has prohibited me from purchasing more.
Now here is a question for you . . . is the food that I purchased for us Christians during the Tribulation OR
For the people that will break into my house to live and survive after I am gone with the Rapture?
I was joking with my friend, if it was for other people, then I would have purchased Mexican food.
Keep Well - LISA
From: Nancy Razik [mailto:nancyrazik@]
Sent: Thursday, March 12, 2009 4:48 PM
To: nancyrazik@
Subject: Store a 30-day supply of non-perishable food, toiletries and other essentials. In major cities, grocery stores are emptied in an hour.
Should We Heed Wilkerson's Warning?
http://www.worldnetdaily.com/
--------------------------------------------------------------------------------
When I was a kid, I read about David Wilkerson who took to Gospel to the gangs of New York. I even saw the movie "The Cross and the Switchblade" that was made about him. Many know about that, but most don't know what happened in his church just eight years ago.
In the fall of 2001, Pastor David Wilkerson, of Times Square Church in New York City, was warned by God that a calamity was coming. For six weeks they felt an intense burden and enormous heaviness. A critical need for intercession was so profound that Pastor Wilkerson canceled everything on the church calendar – mission's conferences, youth events and every guest speaker.
For six weeks, there wasn't a sermon. Instead, there was intercession for our nation with weeping and repentance. They knew something was coming and that something was bad. And that something was soon. So they prayed. And prayed … and prayed.
Then Wilkerson felt God telling him something that seemed rather bizarre. He felt God telling him to make sandwiches – lots of sandwiches. What were they for? Who would eat them? That part wasn't clear, but his church did what they believed God was telling them anyway.
And on the 10th of September they stayed up all night making hundreds and hundreds of peanut butter and jelly sandwiches. By morning they had about 2,000 sandwiches. At 8:46 a.m. the first plane hit the World Trade Center and Times Square Church was ready to feed and minister to rescue workers and victims of our nation's worst attack.
Making sandwiches all night is a strange thing to do. If someone told me to stay up all night making sandwiches, I'd probably tell them they were crazy. But if David Wilkerson says he's heard something from God today, I think we'd be crazy not to listen.
He now says he feels the same thing he felt leading up to the attack by radical Islam. In an "URGENT MESSAGE" dated March 7, 2009, Wilkerson said:
AN EARTH-SHATTERING CALAMITY IS ABOUT TO HAPPEN. IT IS GOING TO BE SO FRIGHTENING, WE ARE ALL GOING TO TREMBLE – EVEN THE GODLIEST AMONG US.
For 10 years I have been warning about a thousand fires coming to New York City. It will engulf the whole megaplex, including areas of New Jersey and Connecticut. Major cities all across America will experience riots and blazing fires – such as we saw in Watts, Los Angeles, years ago.
There will be riots and fires in cities worldwide. There will be looting – including Times Square, New York City. What we are experiencing now is not a recession, not even a depression. We are under God's wrath. In Psalm 11 it is written:
… God is judging the raging sins of America and the nations. He is destroying the secular foundations.
The prophet Jeremiah pleaded with wicked Israel, "God is fashioning a calamity against you and devising a plan against you. Oh, turn back each of you from your evil way, and reform your ways and deeds. But they will say, It's hopeless! For we are going to follow our own plans, and each of us will act according to the stubbornness of his evil heart" (Jeremiah 18:11-12).
In Psalm 11:6, David warns, "Upon the wicked he will rain snares (coals of fire) … fire … burning wind … will be the portion of their cup." Why? David answered, "Because the Lord is righteous" (v. 7). This is a righteous judgment – just as in the judgments of Sodom and in Noah's generation.
WHAT SHALL THE RIGHTEOUS DO? WHAT ABOUT GOD'S PEOPLE?
First, I give you a practical word I received for my own direction. If possible lay in store a 30-day supply of non-perishable food, toiletries and other essentials. In major cities, grocery stores are emptied in an hour at the sign of an impending disaster.
… I will behold our Lord on his throne, with his eye of tender, loving kindness watching over every step I take – trusting that he will deliver his people even through floods, fires, calamities, tests, trials of all kinds.
Note: I do not know when these things will come to pass, but I know it is not far off. I have unburdened my soul to you. Do with the message as you choose.
Warren Buffett has said that our economy has "fallen off a cliff." With the election of the most pro-abortion president (and Congress) in history, there's no question that we deserve God's judgment.
Just yesterday, Barack Obama signed an executive order to use children for spare parts. So much for defending the "least of these," as he so often quoted during his campaign. Cannibalizing the weak to help the strong. And by the way, don't believe everything you hear in the news – Obama didn't say he was against cloning. He said he was against "reproductive" cloning. Killing a new life after cloning one is another matter entirely: welcome to Obama's "Brave New World."
The bottom line is that we are economically and morally bankrupt. And it's reported that Iran now has all they need to build nukes.
So, when the guy who made the 2,000 sandwiches on Sept. 10 warns us: "AN EARTH-SHATTERING CALAMITY IS ABOUT TO HAPPEN," I think we would do well to heed it. And follow the words Wilkerson quotes from the prophet Jeremiah and "turn back each of you from your evil way, and reform your ways and deeds."
Friday, December 19, 2008
Sex and the Oil Barrel
The Wall Street Journal reports that depression fears and continued OPEC production have driven oil prices to four year lows. The pro shares ultra oil and gas etf (DIG) which holds oil company stocks (Exxon is 23% of its holdings) and is 50% leveraged (in other words "The fund seeks daily investment results, before fees and expenses, that correspond to twice (200%) the daily performance of the Dow Jones U.S. Oil & Gas Index") was down 11.7% yesterday.
Few can disagree that buying at a bottom is better than sex. But how far does the oil barrel need to "go down" before we conclude there is a market bottom? The Journal says that this a four-year oil low. Despite the drop from $145.29 to $38, a 74% drop that rivals the tech stocks' fall seven years ago, I would rather be holding oil barrels than dollars, given the hyperinflationary policies of the Reinflateocrat Party!
Back in April '01 I put in a buy for the then QQQ (now QQQQ) for $35. My student, a professional trader who specialized in the Q's, argued that it would never fall that low. In fact, it did, right after 9/11. It ended up falling to something like $17, but then came back to the '40s. Now, in memory of the Q's, should I put in a buy on an oil fund at $35/barrel???
Few can disagree that buying at a bottom is better than sex. But how far does the oil barrel need to "go down" before we conclude there is a market bottom? The Journal says that this a four-year oil low. Despite the drop from $145.29 to $38, a 74% drop that rivals the tech stocks' fall seven years ago, I would rather be holding oil barrels than dollars, given the hyperinflationary policies of the Reinflateocrat Party!
Back in April '01 I put in a buy for the then QQQ (now QQQQ) for $35. My student, a professional trader who specialized in the Q's, argued that it would never fall that low. In fact, it did, right after 9/11. It ended up falling to something like $17, but then came back to the '40s. Now, in memory of the Q's, should I put in a buy on an oil fund at $35/barrel???
Tuesday, December 2, 2008
Chump Change
Barack Obama's famous campaign slogan was "change". At the same time, the most important issue to his supporters and cultish followers was the Iraqi War. Today, President-elect Obama announced the re-appointment of Robert Gates, President Bush's Defense Secretary. Secretary Gates has overseen recent Iraqi War policy, including the surge. Thus, his reappointment is a refreshing surprise, because it suggests a victory of practicality over ideology. But the reappointment does not represent change. It represents continuity.
President-elect Obama has played his cards smartly. But his followers and supporters are chumps. They are suckers. Marks. The suckers include both his hordes of brown shirt-like young followers and the propagandists formerly known as the mainstream media.
I have suggested over many months that Obama's young supporters have been chumps. This younger cohort is a generation that does not read books and that considers Bill Maher to be an information source. Their teachers have not read John Locke. They have never heard of him.
One of my students, a gay activist, became upset with me a few weeks ago when I mentioned during a social occasion (I occasionally have a drink with my MBA students after class) that I thought that George Bush and Barack Obama represented the same interests. His anger was palpable. When I questioned this student, a product of elite universities, whether he had read anything about the Iraqi War; the dispute between Shias and Sunnis; or anything else about the Iraqi War, his answer was "no". When I suggested a couple of books to read, he was not interested. However, he became enraged when I suggested that there would be little difference.
America's failed democracy naturally flows from its failed educational system. Like the ignorant hordes that have supported socialism, fascism and communism, Obama's supporters emphasized slogan over substance, and viewed asking questions as to Obama's vital information and true intentions with venomous hostility. One of his supporters, who calls himself "Diogenes", has seen it so important to suppress any questions that he has come onto this blog repeatedly, hurling curse words and insipid invective such as "tin foil hat" any time that I have raised questions about Mr. Obama. He recently used several insults and curse words when I suggested that Americans need to read John Locke.
In early September I argued that Barack Obama would be a George W. Bush clone and in June, I had suggested that:
"Mr. Obama claims to favor change, yet he is allied with specific economic interests, specifically Wall Street. In 2008, Goldman Sachs so far has given $2.7 million to Democrats and less than $1 million to Republicans. Goldman Sachs's contributions to Democrats has exceeded those to Republicans every year since 1990. To assuage public concern about excessive Wall Street influence on Obama, America's off-the-charts-insipid media provide testimonies from 'principled' Wall Street tycoons like George Soros and Warren Buffett that Obama is for 'change'. Of course, Messrs. Soros and Buffett do not discuss how Obama's 'change' will influence their own economic interests."
It remains to be seen how far Mr. Obama's blithe, sociopathic lying goes and whether he carries it into realms that are potentially harmful to the United States. However, for now he seems to have made clear that change with respect to the Iraqi War is not a top priority for him. In this, he has played his millions of young supporters, including the MBA student, for chumps.
President-elect Obama has played his cards smartly. But his followers and supporters are chumps. They are suckers. Marks. The suckers include both his hordes of brown shirt-like young followers and the propagandists formerly known as the mainstream media.
I have suggested over many months that Obama's young supporters have been chumps. This younger cohort is a generation that does not read books and that considers Bill Maher to be an information source. Their teachers have not read John Locke. They have never heard of him.
One of my students, a gay activist, became upset with me a few weeks ago when I mentioned during a social occasion (I occasionally have a drink with my MBA students after class) that I thought that George Bush and Barack Obama represented the same interests. His anger was palpable. When I questioned this student, a product of elite universities, whether he had read anything about the Iraqi War; the dispute between Shias and Sunnis; or anything else about the Iraqi War, his answer was "no". When I suggested a couple of books to read, he was not interested. However, he became enraged when I suggested that there would be little difference.
America's failed democracy naturally flows from its failed educational system. Like the ignorant hordes that have supported socialism, fascism and communism, Obama's supporters emphasized slogan over substance, and viewed asking questions as to Obama's vital information and true intentions with venomous hostility. One of his supporters, who calls himself "Diogenes", has seen it so important to suppress any questions that he has come onto this blog repeatedly, hurling curse words and insipid invective such as "tin foil hat" any time that I have raised questions about Mr. Obama. He recently used several insults and curse words when I suggested that Americans need to read John Locke.
In early September I argued that Barack Obama would be a George W. Bush clone and in June, I had suggested that:
"Mr. Obama claims to favor change, yet he is allied with specific economic interests, specifically Wall Street. In 2008, Goldman Sachs so far has given $2.7 million to Democrats and less than $1 million to Republicans. Goldman Sachs's contributions to Democrats has exceeded those to Republicans every year since 1990. To assuage public concern about excessive Wall Street influence on Obama, America's off-the-charts-insipid media provide testimonies from 'principled' Wall Street tycoons like George Soros and Warren Buffett that Obama is for 'change'. Of course, Messrs. Soros and Buffett do not discuss how Obama's 'change' will influence their own economic interests."
It remains to be seen how far Mr. Obama's blithe, sociopathic lying goes and whether he carries it into realms that are potentially harmful to the United States. However, for now he seems to have made clear that change with respect to the Iraqi War is not a top priority for him. In this, he has played his millions of young supporters, including the MBA student, for chumps.
Wednesday, November 5, 2008
Inflation and the New President
The Wall Street Journal Online (paid access) has an editorial about the racial and economic implications of the presidential race. WSJ notes:
>"While Mr. Obama lost among white voters, as most modern Democrats do, his success is due in part to the fact that he also muted any politics of racial grievance... The Democratic temptation will be to interpret this victory as a mandate for renewed liberal government. Republicans hope they do. The last three times the Democrats won this kind of victory -- in 1964, 1976 and 1992 -- they overreached and suffered big losses two years later...
>"We'd note in particular that Mr. Obama ran as a tax-cutter for '95% of workers,' promising tax rates 'less than they were under Ronald Reagan.' This is only one of the ways that the skillful candidate was able to disguise the details of what was the most left-of-center Democratic agenda since the early 1970s. The exit polls showed that among the 70% of voters who believe their taxes will go up under Mr. Obama, 55% voted for Mr. McCain. Democrats raise taxes in a recession at their peril..."
The cause of the economic decline that led to the Democratic victory, in WSJ's view, goes:
>"back to the causes of the housing bubble. Republicans -- specifically, Mr. Bush's Federal Reserve nominees and Treasury Secretaries -- forgot about the value of money. They failed as stewards of the dollar, unleashing a credit mania and panic that collided in colossal bad timing with a Presidential campaign."
The response of Henry Paulson and Ben Bernanke has been more spending and more monetary expansion. Barack Obama was elected not by the lower income strata, who were less friendly to him than anticipated, but by those earning over $75,000 who are concerned about their 401ks.
The Democratic response will be to increase the money supply even further. This will enable them to boost the stock market, reduce financial pressure and possibly make possible their policy goals. The result will be inflation. If the Democrats choose to act like conservatives, which the Journal proposes, then the stock market will fall and there will be somewhat less inflation, although the fundamentals for a large inflation are already in place. Moreover, the real estate market may have a lot more to fall, resulting in "stagflation".
I am not a fan of either Republicans or Democrats but view the Republicans as the lesser of two evils. The public remains committed to the current Progressive regime, which subsumes both parties, and can expect poor economic performance, increasing income inequality and reductions in freedom regardless of who is in power.
>"While Mr. Obama lost among white voters, as most modern Democrats do, his success is due in part to the fact that he also muted any politics of racial grievance... The Democratic temptation will be to interpret this victory as a mandate for renewed liberal government. Republicans hope they do. The last three times the Democrats won this kind of victory -- in 1964, 1976 and 1992 -- they overreached and suffered big losses two years later...
>"We'd note in particular that Mr. Obama ran as a tax-cutter for '95% of workers,' promising tax rates 'less than they were under Ronald Reagan.' This is only one of the ways that the skillful candidate was able to disguise the details of what was the most left-of-center Democratic agenda since the early 1970s. The exit polls showed that among the 70% of voters who believe their taxes will go up under Mr. Obama, 55% voted for Mr. McCain. Democrats raise taxes in a recession at their peril..."
The cause of the economic decline that led to the Democratic victory, in WSJ's view, goes:
>"back to the causes of the housing bubble. Republicans -- specifically, Mr. Bush's Federal Reserve nominees and Treasury Secretaries -- forgot about the value of money. They failed as stewards of the dollar, unleashing a credit mania and panic that collided in colossal bad timing with a Presidential campaign."
The response of Henry Paulson and Ben Bernanke has been more spending and more monetary expansion. Barack Obama was elected not by the lower income strata, who were less friendly to him than anticipated, but by those earning over $75,000 who are concerned about their 401ks.
The Democratic response will be to increase the money supply even further. This will enable them to boost the stock market, reduce financial pressure and possibly make possible their policy goals. The result will be inflation. If the Democrats choose to act like conservatives, which the Journal proposes, then the stock market will fall and there will be somewhat less inflation, although the fundamentals for a large inflation are already in place. Moreover, the real estate market may have a lot more to fall, resulting in "stagflation".
I am not a fan of either Republicans or Democrats but view the Republicans as the lesser of two evils. The public remains committed to the current Progressive regime, which subsumes both parties, and can expect poor economic performance, increasing income inequality and reductions in freedom regardless of who is in power.
Wednesday, September 24, 2008
Idiosyncracies of American Democracy
Democracy does not work so rationally as we would wish. The public knows the word "economy" and believes that there are difficulties with it. It is unlikely that many of those who believe that there are difficulties with the economy can identify the diffculties accurately. For example, real wages have been declining since the early 1970s, but the public has not generally been concerned about this trend, which ought to be of serious concern to anyone who works. However, now that the mass media has been telling people that house prices, which have increased dramatically during the same period, are too low, the public feels that there is a crisis.
When I was in college in 1974 I worked as a door man in an apartment building in Manhattan on 54th Street between 5th and 6th Avenues. It was down the street from Gucci's on 5th and across the street from the back entrance of the Museum of Modern Art. At that time I earned about $200 per week and a one bedroom apartment in that building was selling for $55,000. If you multiply $200 per week times 52 weeks and divide the result into $55,000 you get 5.3 times.
A one bedroom apartment in that same building now probably sells for over $1 million. However, wages for building workers have probably gone up about three or four fold. If you're generous to today's door men and you divide $1 million by $45,000 you get 22.2 times, and that is probably an understatement because the apartment may be selling for more than $1 million and the doorman may be making less than $45,000.
Despite apartment prices' having gone up at four times the rate of wages, the public is willing to believe that a reduction in housing prices constitutes a "crisis" and some kind of "unruliness in the markets" that requires massive government intervention.
Let real estate prices fall. Then, perhaps, I can afford a new apartment in Manhattan and move back to civilization!
Even odder than public unawareness that the average person earns less than his parents did is the belief that Barack Obama is somehow best qualified to alleviate the non-existent housing "crisis".
Andy Martin has forwarded a press release that indicates that:
"A new Washington Post poll now shows Barack Obama opening up a decisive lead based on the amazing belief that Obama is more competent to manage the economy."
The Washington Post article states that:
"Just 9 percent of those surveyed rated the economy as good or excellent, the first time that number has been in single digits since the days just before the 1992 election. Just 14 percent said the country is heading in the right direction, equaling the record low on that question in polls dating back to 1973.
"More voters trust Obama to deal with the economy, and he currently has a big edge as the candidate who is more in tune with the economic problems Americans now face. He also has a double-digit advantage on handling the current problems on Wall Street, and as a result, there has been a rise in his overall support."
This is especially odd because it is Obama who has received the lion's share of backing from Wall Street and from the pro-Wall Street media, for instance the New York Times and the media conglomerates that depend on Wall Street for financing. Given that the current "sub-prime crisis" is of Wall Street's making and Wall Street has primarily contributed to Senator Obama, current public opinion can best be described as idiosyncratic.
Part of the idiosyncratic public opinion is likely due to the media's slanted coverage of Obama and McCain. Jim Crum writes in an e-mail:
"I’ve said for months now that the main stream media need to be wearing...knee pads when dealing with Mr. Obama. It really has gotten that bad, and I doubt that there is any sin, now matter how grievous, that would escape their filters and be reported. Meanwhile, there is a near complete blackout on anything or McCain/Palin accomplishes. (Yes I have reservations about McCain & Palin, but given the alternative, there is no substantive choice)."
In an e-mailed press release Andy Martin states that McCain should break with the Bush administration and:
"speak clearly and simply and directly: he must announce in no uncertain terms his total opposition to the Wall Street bailout.
"First, over the past year I have repeatedly pointed out that the current financial crisis is a "manufactured" crisis. The urgency was created by maladroit steps to rein in sub-prime mortgages when they posed no threat to the overall economy. One bad step led to another. We have rather clumsily managed to topple our own financial dominoes. The mess is Wall Street's fault, not George Bush's responsibility."
In several e-mails about the media's reaction to the Obama's campaign lies about Senator McCain's supposed blocking of stem cell research Bob Robbins points out:
"That our media finds it all so amusing tells us just how much they value the truth as well."
The Progressives believed that a well informed democracy would be possible and that the public could fairly assert its own interests given an abundance of good information. Today's public is widely misled by the Progressives' descendants, the mass media, and is incapable of assessing even the most elementary facts about the political economy.
I have an increasing share of my assets either in hard commodities or outside the United States in foreign currency CDs. I do not believe that this country is headed for a healthy future, and it will be worse if Barack Obama, Wall Street's and the New York Times's boy wonder, is elected.
When I was in college in 1974 I worked as a door man in an apartment building in Manhattan on 54th Street between 5th and 6th Avenues. It was down the street from Gucci's on 5th and across the street from the back entrance of the Museum of Modern Art. At that time I earned about $200 per week and a one bedroom apartment in that building was selling for $55,000. If you multiply $200 per week times 52 weeks and divide the result into $55,000 you get 5.3 times.
A one bedroom apartment in that same building now probably sells for over $1 million. However, wages for building workers have probably gone up about three or four fold. If you're generous to today's door men and you divide $1 million by $45,000 you get 22.2 times, and that is probably an understatement because the apartment may be selling for more than $1 million and the doorman may be making less than $45,000.
Despite apartment prices' having gone up at four times the rate of wages, the public is willing to believe that a reduction in housing prices constitutes a "crisis" and some kind of "unruliness in the markets" that requires massive government intervention.
Let real estate prices fall. Then, perhaps, I can afford a new apartment in Manhattan and move back to civilization!
Even odder than public unawareness that the average person earns less than his parents did is the belief that Barack Obama is somehow best qualified to alleviate the non-existent housing "crisis".
Andy Martin has forwarded a press release that indicates that:
"A new Washington Post poll now shows Barack Obama opening up a decisive lead based on the amazing belief that Obama is more competent to manage the economy."
The Washington Post article states that:
"Just 9 percent of those surveyed rated the economy as good or excellent, the first time that number has been in single digits since the days just before the 1992 election. Just 14 percent said the country is heading in the right direction, equaling the record low on that question in polls dating back to 1973.
"More voters trust Obama to deal with the economy, and he currently has a big edge as the candidate who is more in tune with the economic problems Americans now face. He also has a double-digit advantage on handling the current problems on Wall Street, and as a result, there has been a rise in his overall support."
This is especially odd because it is Obama who has received the lion's share of backing from Wall Street and from the pro-Wall Street media, for instance the New York Times and the media conglomerates that depend on Wall Street for financing. Given that the current "sub-prime crisis" is of Wall Street's making and Wall Street has primarily contributed to Senator Obama, current public opinion can best be described as idiosyncratic.
Part of the idiosyncratic public opinion is likely due to the media's slanted coverage of Obama and McCain. Jim Crum writes in an e-mail:
"I’ve said for months now that the main stream media need to be wearing...knee pads when dealing with Mr. Obama. It really has gotten that bad, and I doubt that there is any sin, now matter how grievous, that would escape their filters and be reported. Meanwhile, there is a near complete blackout on anything or McCain/Palin accomplishes. (Yes I have reservations about McCain & Palin, but given the alternative, there is no substantive choice)."
In an e-mailed press release Andy Martin states that McCain should break with the Bush administration and:
"speak clearly and simply and directly: he must announce in no uncertain terms his total opposition to the Wall Street bailout.
"First, over the past year I have repeatedly pointed out that the current financial crisis is a "manufactured" crisis. The urgency was created by maladroit steps to rein in sub-prime mortgages when they posed no threat to the overall economy. One bad step led to another. We have rather clumsily managed to topple our own financial dominoes. The mess is Wall Street's fault, not George Bush's responsibility."
In several e-mails about the media's reaction to the Obama's campaign lies about Senator McCain's supposed blocking of stem cell research Bob Robbins points out:
"That our media finds it all so amusing tells us just how much they value the truth as well."
The Progressives believed that a well informed democracy would be possible and that the public could fairly assert its own interests given an abundance of good information. Today's public is widely misled by the Progressives' descendants, the mass media, and is incapable of assessing even the most elementary facts about the political economy.
I have an increasing share of my assets either in hard commodities or outside the United States in foreign currency CDs. I do not believe that this country is headed for a healthy future, and it will be worse if Barack Obama, Wall Street's and the New York Times's boy wonder, is elected.
Sunday, September 21, 2008
Kathy Laments the Markets
I received the following e-mail from Kathy of the Lone Star State. My response follows:
> Hello Mitchell,
> I am consumed with news between the naked short selling and credit crisis as you are aware. I am effected by the economy in the construction industry, the real estate industry and my ARM.
> Now I am consumed with stocks since I play in the government's form of white-collar-gambling with small amounts of money I have in the stocks. Suddenly short-selling (more painful naked-shorting) is more and more put to the top of my attention. Here I go again, another portion of the dying economy that I hit!
> So, what I just listened to."the problems of Main Street are now affecting Wall Street". Oh, now it's an issue. Okay.
> I turn to your blog with my head spinning. I see (as if I didn't actually know) that news is not a good place to get my news. So, I am asking where (in your opinion) is the "safest" place to get as close to truthful information as possible? I seem to trust no one coming across the electrical waves.
> Additionally, I am lost. BO scares me for a variety of reasons then I am left with McCain, who supported deregulation but is now pushing regulation and blaming for lack of regulation without so much as an "oops, my thinking was incorrect then but now I see". What am I supposed to do now. I only have 5 weeks and 2 days to get my head right. That is not a lot of time with this. Much fuzz and cloud going on here.
My response:
Stocks may be good now. I wouldn't pull out or sell short at this point. We are heading toward the early stages of another inflation and that is usually good for stocks for at least a year.
One thing I can suggest is Howard S. Katz's newsletter and blog. The newsletter
costs $300 a year and I offered to help him market it because it is very good. I have gotten more than a few ideas from him.
He's at:
http://www.thegoldbugnet.blogspot.com
http://www.thegoldbug.net
I don't have much more than that to recommend. You might try the Wall Street Journal as a basic newspaper. I don't read it myself at this point but I'm thinking of starting. I have been subscribing to the NY Sun, but they are likely to close their doors at the end of this month. Howard and other friends read the Times and the Economist to see what the establishment is thinking, but I don't have the time to make a career of doing that, and they are not good news sources. Fox is a joke. I wish I had something more to suggest, but honestly I don't.
One approach is to assume the opposite of what your newspaper is saying. They say that there's a financial crisis, so assume that there is a bull market coming. If they start saying that the economy's going great, assume that there's high inflation and misallocation of resources, etc.
As far as the general election, I support McCain as the "lesser of two evils" but the time is nearing where I may decide to vote for the Libertarian Party as the "least of three evils".
> Hello Mitchell,
> I am consumed with news between the naked short selling and credit crisis as you are aware. I am effected by the economy in the construction industry, the real estate industry and my ARM.
> Now I am consumed with stocks since I play in the government's form of white-collar-gambling with small amounts of money I have in the stocks. Suddenly short-selling (more painful naked-shorting) is more and more put to the top of my attention. Here I go again, another portion of the dying economy that I hit!
> So, what I just listened to."the problems of Main Street are now affecting Wall Street". Oh, now it's an issue. Okay.
> I turn to your blog with my head spinning. I see (as if I didn't actually know) that news is not a good place to get my news. So, I am asking where (in your opinion) is the "safest" place to get as close to truthful information as possible? I seem to trust no one coming across the electrical waves.
> Additionally, I am lost. BO scares me for a variety of reasons then I am left with McCain, who supported deregulation but is now pushing regulation and blaming for lack of regulation without so much as an "oops, my thinking was incorrect then but now I see". What am I supposed to do now. I only have 5 weeks and 2 days to get my head right. That is not a lot of time with this. Much fuzz and cloud going on here.
My response:
Stocks may be good now. I wouldn't pull out or sell short at this point. We are heading toward the early stages of another inflation and that is usually good for stocks for at least a year.
One thing I can suggest is Howard S. Katz's newsletter and blog. The newsletter
costs $300 a year and I offered to help him market it because it is very good. I have gotten more than a few ideas from him.
He's at:
http://www.thegoldbugnet.blogspot.com
http://www.thegoldbug.net
I don't have much more than that to recommend. You might try the Wall Street Journal as a basic newspaper. I don't read it myself at this point but I'm thinking of starting. I have been subscribing to the NY Sun, but they are likely to close their doors at the end of this month. Howard and other friends read the Times and the Economist to see what the establishment is thinking, but I don't have the time to make a career of doing that, and they are not good news sources. Fox is a joke. I wish I had something more to suggest, but honestly I don't.
One approach is to assume the opposite of what your newspaper is saying. They say that there's a financial crisis, so assume that there is a bull market coming. If they start saying that the economy's going great, assume that there's high inflation and misallocation of resources, etc.
As far as the general election, I support McCain as the "lesser of two evils" but the time is nearing where I may decide to vote for the Libertarian Party as the "least of three evils".
Friday, September 19, 2008
Barack Obama: Progressive for President
The Progressives believed that socialism should replace individualism and that community was more important than individuality. Barack Obama is repeating 120-year-old ideas in the name of "change". Senator Obama's "change" is the 120-year-old rhetoric of Herbert Croly and Walter Weyl.
The AP Division of the BOIS reports that Senator Obama says:
"Get rid of this philosophy. Get rid of the do-nothing approach to our economic problem and put somebody in there who's going to fight for you."
What a laugh. I doubt Senator Obama could describe the fundamental concepts underlying laissez-faire and I also doubt that he could accurately describe developmental differences between laissez-faire and mercantilist states.
Senator Obama is slated to make some statements on the economy today. I'll try to keep from yawning.
The AP Division of the BOIS reports that Senator Obama says:
"Get rid of this philosophy. Get rid of the do-nothing approach to our economic problem and put somebody in there who's going to fight for you."
What a laugh. I doubt Senator Obama could describe the fundamental concepts underlying laissez-faire and I also doubt that he could accurately describe developmental differences between laissez-faire and mercantilist states.
Senator Obama is slated to make some statements on the economy today. I'll try to keep from yawning.
Thursday, September 18, 2008
Newt Gingrich and Solutions Day
I received the following e-mail from Newt Gingrich, which presumably went out to the RNC mailing list. Speaker Gingrich wants to have a national "talk about the fundamentals" and "solutions for getting the economy back on track". On Solutions Day he wants to get Washington and Wall Street to be like America instead of America's becoming more like Wall Street.
My e-mail response to Speaker Gingrich was this:
Dear Newt--thanks for the message and I'll be glad to post it, but I do have one question for you. Why didn't Congress move to abolish the Department of Education when you were Speaker? Thanks and best wishes, Mitchell Langbert.
This is Speaker Gingrich's e-mail:
Dear Mitchell,
The last few weeks have been painful economically.
Washington politicians in both parties are panicked and as a result they are making things worse. Now we have a Treasury Department which is capriciously deciding which firm to help and which firm to let die.
In the process, it is piling up huge liabilities for taxpayers by "saving" Fannie Mae and Freddie Mac and then allowing Lehman Brothers to go bankrupt before "saving" AIG at a potential risk of another $85 billion.
It's time to have a serious talk about the fundamentals--not politicians taking your money to prop up failed businesses.
On Saturday, September 27 American Solutions will hold its second annual Solutions Day to propose bold, dramatic change for the economy, energy, education, and health. You can participate in this important solutions-oriented dialogue for free by clicking here and hosting or attending an event in your community. Solutions Day will be broadcast live on DISH Network #219, DirecTV #577, and www.SolutionsDay2008.com.
Despite the mistakes of the last few weeks and the sense of panic on Wall Street and in Washington the basics of America are still healthy.
We now face a fundamental choice of returning to the fundamentally healthy American economy and American work ethic and making Washington and Wall Street more like America OR passing laws which reshape America to be more like the current sickness in Washington and Wall Street.
Watch this short video about America's economic challenges and then register to join me on Solutions Day to develop solutions to get America back on the right track.
Your friend,
Newt
My e-mail response to Speaker Gingrich was this:
Dear Newt--thanks for the message and I'll be glad to post it, but I do have one question for you. Why didn't Congress move to abolish the Department of Education when you were Speaker? Thanks and best wishes, Mitchell Langbert.
This is Speaker Gingrich's e-mail:
Dear Mitchell,
The last few weeks have been painful economically.
Washington politicians in both parties are panicked and as a result they are making things worse. Now we have a Treasury Department which is capriciously deciding which firm to help and which firm to let die.
In the process, it is piling up huge liabilities for taxpayers by "saving" Fannie Mae and Freddie Mac and then allowing Lehman Brothers to go bankrupt before "saving" AIG at a potential risk of another $85 billion.
It's time to have a serious talk about the fundamentals--not politicians taking your money to prop up failed businesses.
On Saturday, September 27 American Solutions will hold its second annual Solutions Day to propose bold, dramatic change for the economy, energy, education, and health. You can participate in this important solutions-oriented dialogue for free by clicking here and hosting or attending an event in your community. Solutions Day will be broadcast live on DISH Network #219, DirecTV #577, and www.SolutionsDay2008.com.
Despite the mistakes of the last few weeks and the sense of panic on Wall Street and in Washington the basics of America are still healthy.
We now face a fundamental choice of returning to the fundamentally healthy American economy and American work ethic and making Washington and Wall Street more like America OR passing laws which reshape America to be more like the current sickness in Washington and Wall Street.
Watch this short video about America's economic challenges and then register to join me on Solutions Day to develop solutions to get America back on the right track.
Your friend,
Newt
Tuesday, September 16, 2008
Barack Obama's Leeches
Mayor Bloomberg was on television yesterday. I wasn't paying careful attention but he seemed to be suggesting that American International Group will survive despite financial losses and that markets need to be regulated. The Sun reports today that Governor Paterson is changing New York insurance law to allow the firm to borrow from its subsidiaries. The rule of law is is becoming an alien concept to our increasingly socialistic, government-by-whim society. What especially troubles me is that I doubt that Governor Paterson or Mayor Bloomberg have ever learned about or thought about why the rule of law was associated with the solitary (in world history) rise of technology and wealth under free market capitalism, and how violating it will destroy the incentives and flexibility that enable it. Americans have allowed themselves to be led by fools.
Another potential milestone on America's government-built expressway to serfdom is that, as the Sun's Russell Berman reports, our inept automakers may get a bailout from the American people. The automakers don't think enough of American workers to locate their plants in Flint or Detroit, but they are happy to accept alms from those same workers.
The Sun notes:
"The nation's top car manufacturers are pushing Congress to act by the end of this month to guarantee $25 billion in loans to help them invest in the production of fuel-efficient vehicles. The idea is being greeted warmly by both the Democratic and Republican presidential candidates, who see it as a way to win votes in the swing state of Michigan while also moving America away from dependence on foreign oil."
The pattern of government support for incompetently managed businesses, from Fannie Mae in Washington to General Motors in Detroit to Bear Stearns in Manhattan, is a function of a failed, mercantilist economic model associated with Harvard University and the New Deal. The vicious harm that this ideology is doing to America's future is evident. When firms are badly managed, they should be closed and replaced by more nimble firms with more capable managements, not supported at taxpayer expense through the printing of money. Readjustments are painful, but the alternative is economic decline as resources are diverted to incompetent and slothful cronies at the expense of innovative entrepreneurs.
In response to massive over-regulation, government subsidized-firm incompetence and failed, New Deal economic theories, Senator Barack Obama, like Mayor Bloomberg a product of Harvard's graduate program, calls for more regulation. This call is echoed by John McCain, Harry Reid and our other illiterate leaders, who tell the American public that they will illegalize greed, all the while snickering as the laws that they pass reflect their own greed.
Senator Obama reminds me of Benjamin Rush, the physician who signed the Declaration of Independence. As a political activist we can respect Rush, but as a physician he advocated the aggressive use of leeches to cure disease. The idea that leeches can cure cancer is much like Senator Obama's and Mayor Bloomberg's idea that more regulation can cure economic decline.
The Sun notes that Senator McCain's diagnosis is as off base as Senator Obama's, and they are right. The state of education about economics is this. The establishment advocates economic ideas that harm innovation and the average American's long term prospects, and they do it in the name of helping the average American. Regulation is a leech-cure that weakens the patient instead of curing him. What is worse, though, is that regulation does protect one group: the physicians' friends, the wealthy recipients of corporate welfare.
Benjamin Rush aimed to cure his patients. Barack Obama and Mayor Michael Bloomberg are much worse. They are willing to harm the American public in order to benefit themselves, their contributors and their fellow Harvard alumni. They may really believe their silly ideas. But alternative knowledge is available, and they are unwilling to be educated.
Another potential milestone on America's government-built expressway to serfdom is that, as the Sun's Russell Berman reports, our inept automakers may get a bailout from the American people. The automakers don't think enough of American workers to locate their plants in Flint or Detroit, but they are happy to accept alms from those same workers.
The Sun notes:
"The nation's top car manufacturers are pushing Congress to act by the end of this month to guarantee $25 billion in loans to help them invest in the production of fuel-efficient vehicles. The idea is being greeted warmly by both the Democratic and Republican presidential candidates, who see it as a way to win votes in the swing state of Michigan while also moving America away from dependence on foreign oil."
The pattern of government support for incompetently managed businesses, from Fannie Mae in Washington to General Motors in Detroit to Bear Stearns in Manhattan, is a function of a failed, mercantilist economic model associated with Harvard University and the New Deal. The vicious harm that this ideology is doing to America's future is evident. When firms are badly managed, they should be closed and replaced by more nimble firms with more capable managements, not supported at taxpayer expense through the printing of money. Readjustments are painful, but the alternative is economic decline as resources are diverted to incompetent and slothful cronies at the expense of innovative entrepreneurs.
In response to massive over-regulation, government subsidized-firm incompetence and failed, New Deal economic theories, Senator Barack Obama, like Mayor Bloomberg a product of Harvard's graduate program, calls for more regulation. This call is echoed by John McCain, Harry Reid and our other illiterate leaders, who tell the American public that they will illegalize greed, all the while snickering as the laws that they pass reflect their own greed.
Senator Obama reminds me of Benjamin Rush, the physician who signed the Declaration of Independence. As a political activist we can respect Rush, but as a physician he advocated the aggressive use of leeches to cure disease. The idea that leeches can cure cancer is much like Senator Obama's and Mayor Bloomberg's idea that more regulation can cure economic decline.
The Sun notes that Senator McCain's diagnosis is as off base as Senator Obama's, and they are right. The state of education about economics is this. The establishment advocates economic ideas that harm innovation and the average American's long term prospects, and they do it in the name of helping the average American. Regulation is a leech-cure that weakens the patient instead of curing him. What is worse, though, is that regulation does protect one group: the physicians' friends, the wealthy recipients of corporate welfare.
Benjamin Rush aimed to cure his patients. Barack Obama and Mayor Michael Bloomberg are much worse. They are willing to harm the American public in order to benefit themselves, their contributors and their fellow Harvard alumni. They may really believe their silly ideas. But alternative knowledge is available, and they are unwilling to be educated.
Thursday, September 11, 2008
Economy Talk
Republican talk show pundits like Sean Hannity are wrong to defend George Bush. In pursuing an inflationary, interventionist policy President Bush and Ben Bernanke have behaved like Democrats, not Republicans.
Nancy and Contrairimairi have sent me e-mails recently about the economy. I agree with any and all tax cuts, and I disagree with the idea that the current problems in the economy are due to tax cuts (or taxes at all). Contrairimairi's brother is a Democrat, and I agree with him on a few points, but the ultimate prescription is NOT that a Democrat can solve the mess that George W. Bush's and Ben Bernanke's Federal Reserve Bank has created. From a historical perspective, President Bush has exaggerated policies that the Democrats established. The policies should be abolished.
Nor do I think the current problems in the economy have anything to do with Congress. Moreover, Obama would be worse than McCain. The reason he would be worse is that he is more closely linked to Wall Street than McCain is. The uncertainty and instability that we are facing are all due to manipulation by the Federal Reserve Bank. I've blogged on this alot (also see here, here, here, here, here, and here, here).
The Fed was aggressively increasing the money supply until about five years ago, when it started encouraging foreign governments to purchase Treasury Bonds, boosting the value of the dollar. Long term the dollar is going down, but short term it has been increasing.
The inflation rate has been low because the increased money supply encouraged lower interest rates for many years that made lending easier and this stimulated commodity production. The commodity firms increased production in the 1980s and 1990s and then when prices fell they reduced production. The result was they lost alot of money and they will resist new production. In response to the reduced production, prices started increasing about four or five years ago. What should happen is inflation followed by the Fed's reducing the money supply (raising interest rates) but they have not done that because the Republicans don't want a stock market crash while in office. Reducing interest rates will reduce the stock markets. Thus, the Fed has delayed the usual stock market cycle. Also, the low interest rates stimulated bad investment in real estate and the Fed has also been subsidizing the results. The effects of all the bad investment and subsidies to Wall Street ought to be a combination of rising interest rates and inflation like in the 1970s. But the Fed has performed a trick by getting foreign governments to inflate for us. This will not last forever.
But the pain can continue for a long time as the subsidization of bad investments by increasing the money supply can continue until actual inflation starts. Then the public will deamand action and the Fed will raise rates. This may happen after the election as McCain is envisioning himself as a one term president anyway, although Palin's nomination may change that. It could be delayed for 10 years or more depending on how much strength is in the world economy to keep subsidizing the US economy.
In short, there is a considerable amount of manipulation by central banks right now and the US central bank, the Federal Reserve, has been willing to subsidize incompetent firms. This will ultimately result in inflation. I would tell you to buy hard assets, i.e., platinum, gold and silver, but the trick that the Fed is playing with the foreign central banks is currently causing a steep drop in the gold price along with an increase in the dollar. At some point in the near future, possibly when gold hits around 700 or 670, then it will be a good time to buy gold and Euros.
I disagree that the Democrats can solve these problems. The problem in our economy is due to policies that were adopted in 1932 by Franklin D. Roosevelt and in 1971 by Richard Nixon. In 1932 FDR illegalized gold ownership and took the Fed off the gold standard. An international gold standard was reinstated in 1944, I think, but in 1971 Richard M. Nixon abolished that one. The cause of the Fed's unlmited power to create money was a three step process. Wilson, a Democrat, founded the Fed in 1913. Roosevelt, a Democrat, abolished the gold standard in 1932. Nixon, a Republican, abolished the international gold standard in 1971. The Democrats have never advocated reinstatment of a gold standard or a monetary rule, which was what Milton Friedman advocated. The end result has been the kind of policies we see today. They are the result of:
1. Partnership between government and business, a long standing policy that the Democrats have advocated
2. Abolition of the gold standard, a long standing Democratic Party policy
3. Keynesian economics, a long standing economic theory advocated by the Democratic Party.
The Republicans have copied the Democrats on this. Blaming the imitators in favor of the originators will not solve the problem. Nor is regulation or deregulation of FNMA relevant. The Democrats show that they do not grasp/do not want to solve the underlying problem by blaming speculators for inflation and bringing up irrelevant topics such as regulation and the income tax when the real problem is monetary policy and unlimited Federal Reserve power to create money. This is the Democrats' policy that the Republicans have adopted. It is decidedly pro-Wall Street, and Wall Street has chiefly contributed to Obama, not McCain.
Contraririmairi writes:
>I will assume you received the "just 2 years" e-mail from Nancy. I sent it off to my brother. He and I had just had a VERY lengthy discussion on many of these issues two nights before. He did, however, take the time to pick the e-mail apart, and I thought you would be interested in his response.
Contrairimairi's brother writes:
The "intertia" of the US economy averages about 5 years (despite this, Congress refuses to go onto 5 year budget cycles and corporations are even worse, with quarterly cycles). In other words, major changes take about 5 years before their full impact is felt.
- Regardless of program changes, the short term result is usually positive since the planning that goes into making such changes is usually focused no further than 12 months in advance, due in large part to a very broken Federal budgeting system and ZERO accountability.
- Due to deficit spending - a situation that occurs when taxes are too low to support the programs that greedy people demands (and compounded with graft and kickbacks to crooked politicians and their lobbyist buddies) - the government has been printing money without substantial basis in GDP valuation, resulting in inflation and radical drop in the value of the dollar - which leads to higher prices, greater control over our country by (hostile) foreign interests willing to cash in on our stupidity, and those two factors in turn lead to massive financial pressure on people - many of whom were not financially prepared for home ownership but were funded in the Fannie/Freddie Ponzi scheme.
- These cost pressures and devaluations/inflation are undeniably tied to Republican actions to cut taxes, mainly on the rich, in hopes the proven-broken "trickle" down theory will continue to hold. Corporations, having no conscience, see no advantage in attempting to radically expand in a stagnant market, while others - like oil companies - benefit from the price increases caused by a weak dollar, fabricated shortages and crooked futures dealers. The result? Higher profits - for a while - followed by sharp cutbacks, which increases unemployment and forces even more jobs offshore, leading to an increase in unemployment and a further drop in the value of the dollar. This situation is called "positive feedback" - the exact same mechanism that results in those painful speaker-system squeals during church or public events when somebody doesn't take proper care to make sure inputs and outputs are balanced. Works for money too.
- Privatization of Fannie Mae and Freddie Mac (and other government agencies) could result in one of the largest "dumps" ever on individuals, as we (as taxpayers) have to bail out the greedy, corrupt, and inept "management"...
And just to be clear - if Obama gets elected tomorrow NOTHING will change.
- Ask yourself: if taxes were cut to ZERO, how would the bills get paid? Yet the current path is to reduce taxes to ZERO for the rich (i.e., eliminating the Corporate Gains tax, the Estate Tax, etc.). Guess who gets to make up the difference, shoulder the load, and bail out the crooks?"
Nancy writes:
In just two years ..... Remember the election in 2006?
Thought you might like to read the following ~
A little over one year ago:
1) Consumer confidence stood at a 2 1/2 year high;
2) Regular gasoline sold for $2.19 a gallon;
3) The unemployment rate was 4.5%.
Since voting in a Democratic Congress in 2006 we have seen:
1) Consumer confidence plummet;
2) The cost of regular gasoline soar to over $3.50 a gallon;
3) Unemployment is up to 5% (a 10% increase);
4) American households have seen $2.3 trillion in equity value evaporate (stock and mutual fund losses);
5) Americans have seen their home equity drop by $1.2 trillion dollars;
6) 1% of American homes are in foreclosure.
America voted for change in 2006, and we got it!
Remember it's Congress that makes law not the President. He has to work with what's handed to him.
Nancy and Contrairimairi have sent me e-mails recently about the economy. I agree with any and all tax cuts, and I disagree with the idea that the current problems in the economy are due to tax cuts (or taxes at all). Contrairimairi's brother is a Democrat, and I agree with him on a few points, but the ultimate prescription is NOT that a Democrat can solve the mess that George W. Bush's and Ben Bernanke's Federal Reserve Bank has created. From a historical perspective, President Bush has exaggerated policies that the Democrats established. The policies should be abolished.
Nor do I think the current problems in the economy have anything to do with Congress. Moreover, Obama would be worse than McCain. The reason he would be worse is that he is more closely linked to Wall Street than McCain is. The uncertainty and instability that we are facing are all due to manipulation by the Federal Reserve Bank. I've blogged on this alot (also see here, here, here, here, here, and here, here).
The Fed was aggressively increasing the money supply until about five years ago, when it started encouraging foreign governments to purchase Treasury Bonds, boosting the value of the dollar. Long term the dollar is going down, but short term it has been increasing.
The inflation rate has been low because the increased money supply encouraged lower interest rates for many years that made lending easier and this stimulated commodity production. The commodity firms increased production in the 1980s and 1990s and then when prices fell they reduced production. The result was they lost alot of money and they will resist new production. In response to the reduced production, prices started increasing about four or five years ago. What should happen is inflation followed by the Fed's reducing the money supply (raising interest rates) but they have not done that because the Republicans don't want a stock market crash while in office. Reducing interest rates will reduce the stock markets. Thus, the Fed has delayed the usual stock market cycle. Also, the low interest rates stimulated bad investment in real estate and the Fed has also been subsidizing the results. The effects of all the bad investment and subsidies to Wall Street ought to be a combination of rising interest rates and inflation like in the 1970s. But the Fed has performed a trick by getting foreign governments to inflate for us. This will not last forever.
But the pain can continue for a long time as the subsidization of bad investments by increasing the money supply can continue until actual inflation starts. Then the public will deamand action and the Fed will raise rates. This may happen after the election as McCain is envisioning himself as a one term president anyway, although Palin's nomination may change that. It could be delayed for 10 years or more depending on how much strength is in the world economy to keep subsidizing the US economy.
In short, there is a considerable amount of manipulation by central banks right now and the US central bank, the Federal Reserve, has been willing to subsidize incompetent firms. This will ultimately result in inflation. I would tell you to buy hard assets, i.e., platinum, gold and silver, but the trick that the Fed is playing with the foreign central banks is currently causing a steep drop in the gold price along with an increase in the dollar. At some point in the near future, possibly when gold hits around 700 or 670, then it will be a good time to buy gold and Euros.
I disagree that the Democrats can solve these problems. The problem in our economy is due to policies that were adopted in 1932 by Franklin D. Roosevelt and in 1971 by Richard Nixon. In 1932 FDR illegalized gold ownership and took the Fed off the gold standard. An international gold standard was reinstated in 1944, I think, but in 1971 Richard M. Nixon abolished that one. The cause of the Fed's unlmited power to create money was a three step process. Wilson, a Democrat, founded the Fed in 1913. Roosevelt, a Democrat, abolished the gold standard in 1932. Nixon, a Republican, abolished the international gold standard in 1971. The Democrats have never advocated reinstatment of a gold standard or a monetary rule, which was what Milton Friedman advocated. The end result has been the kind of policies we see today. They are the result of:
1. Partnership between government and business, a long standing policy that the Democrats have advocated
2. Abolition of the gold standard, a long standing Democratic Party policy
3. Keynesian economics, a long standing economic theory advocated by the Democratic Party.
The Republicans have copied the Democrats on this. Blaming the imitators in favor of the originators will not solve the problem. Nor is regulation or deregulation of FNMA relevant. The Democrats show that they do not grasp/do not want to solve the underlying problem by blaming speculators for inflation and bringing up irrelevant topics such as regulation and the income tax when the real problem is monetary policy and unlimited Federal Reserve power to create money. This is the Democrats' policy that the Republicans have adopted. It is decidedly pro-Wall Street, and Wall Street has chiefly contributed to Obama, not McCain.
Contraririmairi writes:
>I will assume you received the "just 2 years" e-mail from Nancy. I sent it off to my brother. He and I had just had a VERY lengthy discussion on many of these issues two nights before. He did, however, take the time to pick the e-mail apart, and I thought you would be interested in his response.
Contrairimairi's brother writes:
The "intertia" of the US economy averages about 5 years (despite this, Congress refuses to go onto 5 year budget cycles and corporations are even worse, with quarterly cycles). In other words, major changes take about 5 years before their full impact is felt.
- Regardless of program changes, the short term result is usually positive since the planning that goes into making such changes is usually focused no further than 12 months in advance, due in large part to a very broken Federal budgeting system and ZERO accountability.
- Due to deficit spending - a situation that occurs when taxes are too low to support the programs that greedy people demands (and compounded with graft and kickbacks to crooked politicians and their lobbyist buddies) - the government has been printing money without substantial basis in GDP valuation, resulting in inflation and radical drop in the value of the dollar - which leads to higher prices, greater control over our country by (hostile) foreign interests willing to cash in on our stupidity, and those two factors in turn lead to massive financial pressure on people - many of whom were not financially prepared for home ownership but were funded in the Fannie/Freddie Ponzi scheme.
- These cost pressures and devaluations/inflation are undeniably tied to Republican actions to cut taxes, mainly on the rich, in hopes the proven-broken "trickle" down theory will continue to hold. Corporations, having no conscience, see no advantage in attempting to radically expand in a stagnant market, while others - like oil companies - benefit from the price increases caused by a weak dollar, fabricated shortages and crooked futures dealers. The result? Higher profits - for a while - followed by sharp cutbacks, which increases unemployment and forces even more jobs offshore, leading to an increase in unemployment and a further drop in the value of the dollar. This situation is called "positive feedback" - the exact same mechanism that results in those painful speaker-system squeals during church or public events when somebody doesn't take proper care to make sure inputs and outputs are balanced. Works for money too.
- Privatization of Fannie Mae and Freddie Mac (and other government agencies) could result in one of the largest "dumps" ever on individuals, as we (as taxpayers) have to bail out the greedy, corrupt, and inept "management"...
And just to be clear - if Obama gets elected tomorrow NOTHING will change.
- Ask yourself: if taxes were cut to ZERO, how would the bills get paid? Yet the current path is to reduce taxes to ZERO for the rich (i.e., eliminating the Corporate Gains tax, the Estate Tax, etc.). Guess who gets to make up the difference, shoulder the load, and bail out the crooks?"
Nancy writes:
In just two years ..... Remember the election in 2006?
Thought you might like to read the following ~
A little over one year ago:
1) Consumer confidence stood at a 2 1/2 year high;
2) Regular gasoline sold for $2.19 a gallon;
3) The unemployment rate was 4.5%.
Since voting in a Democratic Congress in 2006 we have seen:
1) Consumer confidence plummet;
2) The cost of regular gasoline soar to over $3.50 a gallon;
3) Unemployment is up to 5% (a 10% increase);
4) American households have seen $2.3 trillion in equity value evaporate (stock and mutual fund losses);
5) Americans have seen their home equity drop by $1.2 trillion dollars;
6) 1% of American homes are in foreclosure.
America voted for change in 2006, and we got it!
Remember it's Congress that makes law not the President. He has to work with what's handed to him.
Monday, August 4, 2008
The Progressives' Sleight of Hand
In the nineteenth century, "progress" meant technological and economic progress. Whig economists like Henry Carey believed in progress and were optimistic as opposed to the pessimism of Malthus and the Manchester school. However, by "progress" Carey meant technological and economic progress. He did not see politics as important. The idea that progress ought to occur through the political system was introduced in the late nineteenth century in several ways. First, the Mugwumps argued that rationalization of public administration through Civil Service laws meant progress. Populists argued that large scale industry must be broken up by government edict. Americans such as Henry Carter Adams, Richard T. Ely and John R. Commons, educated in Germany began to argue for social democratic intervention. Thus, the Progressives identified progress with governmental reform. Which is more important: breakthrough technologies and better management methods that increase wealth, or government policies that rationalize government operations and redistribute wealth? The Progressives seem to not have realized that there was a trade off. In particular, the policies that implement redistribution and regulation forestall entrepreneurship because their costs rest most heavily on small business entrepreneurs. The result is that the Progressives adopted an anti-progressive attitude toward technological and market progress, which was carried forward through the New Deal. The twentieth century saw a slowing of technological progress because of monetary, regulatory and redistributive reforms of the Progressive and New Deal era.
Monday, June 16, 2008
Social Democratic Liberalism Came to Serve Corruption
Americans' acceptance of the Keynesian ideology, often called social democracy or post-war liberalism, had its roots in Hamiltonian Federalism. Hamilton, a follower of Hume's economic ideas, had advocated federal expansion of credit and concentration of its availability to business interests. This was to be accomplished by federal assumption of the Revolutionary War debt and establishment of a central bank. Hume had argued that if credit is made available to merchants, then the merchants' smart investment decisions would allocate resources into their most productive uses. Thus, the public might become richer by the artifical creation of money, in Hume's view. Hume assumed that it is a good bet for the public to bear investment risk. But there is certainly risk. Hume believed that the risk would pay off, but this is an apriori argument, not an empirical fact. Moreover, this argument rested on particular facts that were true in the 18th century and ceased to be true by the late nineteenth, in particular merchants' personal assumption of risk.
Hume wrote at a time when corporations did not exist. Corporations did not take their present form until the late nineteenth century, as late as the 1890s. At the time that Hume wrote, merchants who assumed risk did so on their own account, and if they lost money they personally suffered. Thus, there was considerable motivation for rational, profit-maximizing behavior. When central banking was abolished, business needed alternative means to aggregate capital. Corporate organization did so, and it did so by shifting risk away from entrepreneurs and merchants onto investors. This is a more rational method for allocating risk than is central banking because it can reflect personal preferences for risk. Moreover, it permits reflection of a wide range of public preferences. Some people have considerable utility for money in the present because they prefer to consume. Consumers might prefer not to take risks with money but rather to spend it. In contrast, other people have greater utility for money in the future. Such investors can choose to invest more heavily in corporate ventures than a central bank's broad allocation of public resources to specific interests would permit.
Corporate organization might be viewed as an alternative form of capital aggregation to central banking. It is superior because the allocation of risk is explicit. Those who wish to take risks invest in the corporation, while those who do not wish to take risks do not invest. This contrasts with monetary creation by the central bank, which forces all citizens to participate in risky business decisions whether they choose to or not.
But the compounding of the corporate form with central banking might exaggerate risk taking and confound the Humean-Hamiltonian model. Merchants who are not personally at risk may not behave rationally. The result is a potential for corrpution. A corporate president who is granted dollops of credit artificially created by a central bank might be motivated to present false earnings reports, pay himself an exaggerated salary and then resign from the firm before it goes bankrupt, much as the officers of Enron and Bear Stearns did. There is no guarantee of rational behavior by corporate organizations staffed by self interested bureaurcrats. Thus, the subsequent adoption of Hamiltonian Federalism under the Keynesian moniker has gradually led to a crap shoot economy unbridled by rationality and propelled by self-seeking, incompetence and greed.
By 1830 it was evident to most workers that the Central Banking system was not beneficial to them. The Humean and Hamiltonian theory of credit had failed. In particular, banking monopolies led to depreciating currency which in turn led to resentment of the central bank, which President Andrew Jackson abolished in 1832 and 1833. Between 1833 and 1913 there was no central bank, and this was the period of greatest economic creativity in American history. It was also a period of slow business profit, which resulted in repeated complaints about "depressions". Every decade saw increasing real wages and every decade saw a "depression". By the end of the 19th century the average American was much better off, the American economy was the center of world innovation, immigrants flocked here by the millions, but business interests incessantly complained about "depression". Moreover, governmental subsidies to railroads engendered corruption and overexpansion. Post-Civil War monetary inflation facilitated speculation and created income inequality. This occurred at the same time that Jackson's spoils system led to political corruption in the cities.
Many observers felt that rationalization of the state through civil service would improve the economy. The traditional American belief that morality led to economic success was being tested by corruption associated with the railroads and political clubs in the cities. In 1883 Congress passed the Pendleton Act, which created a rudimentary civil service for the federal government. In turn, advocates of moral and limited government, to include the Mugwumps, argued for increased use of civil service, honesty in government, and the gold standard and reduced tariffs. The election of 1884, in which the Mugwumps bolted the Republican Party to support Grover Cleveland, led to Cleveland's election. At the same time, the corporate form of organization facilitated the expansion of industry.
During this period Bismarck in Germany was experimenting with social democracy. Bismarck implemented national health insurance, social security and other social programs. The German historical school of economics argued against the laissez faire economics of Charles Sumner and Adam Smith. Smith, like Hume, argued that there are general laws of economic development. In contrast, the German historical school argued that economic laws are specific to time and place and that generalization is impossible. Moreover, the German historical school assumed that it is possible to rationally guide an economy. This contrasts with Hume's belief that merchants are better equipped to assess investment opportunities than anyone else. It also contrasts with the Whiggish and Jeffersonian belief in countryside entrepreneurs as better equipped to assess investment opportunity than either central planners or elite merchants.
In the late nineteenth century young American academics such as Henry Carter Adams, Richard T. Ely and John R. Commons sought education in the German universities. This was linked to the late nineteenth century Mugwumps' interest in establishing professions. The Mugwumps not only believed in fighting corruption and establishing sound money, but they also had specific professional interests in mind. They wanted to establish standards in academia, law, medicine and other professions. These professional interests became the common thread of modern liberalism. If there is one constant theme from the Mugwumps to todays American Association of University Professors, it is the importance of a college education, professionalism and regulations to establish them. The Mugwumps did not believe in social democracy, but they did believe in rationalization. The German universities were the best in the world, and they thought that if Americans were trained in German universities that they could bring the best methods to bear on American problems. But in social science the German universities were not really so methodologically advanced. The German historical school's emphasis on state-based solutions was a form of romanticism. The Americans who studied in Germany brought some reform ideas to bear on American problems, but combined these with faith in the power the state to solve social problems.
At first the Mugwumps resented the ideas of Richard T. Ely and Henry Carter Adams. As Nancy Cohen points out, Ely, who founded the American Economics Association, was denied tenure and forced to conform to the Mugwumps' expectations. Henry Carter Adams left academia altogether. However, the long term effect was to stimulate support for Progressivism. Ely's student John R. Commons was a central figure in the reform-oriented Wisconsin school, for instance. Progressivism had a number of roots, to include Social Gospel Christianity and Populism, but it was also heavily influenced by Commons's academic theories. Progressivism should not be confused with socialism or social democracy. At times it had elements of these but it included reform ideas of varying kinds.
In 1913, Woodrow Wilson had established the Federal Reserve Bank in order to rationalize the credit markets. Wilson was a supporter of the gold standard and had voted for the Gold Democrats in 1896. He did not anticipate a return to Hamiltonian Federalism. Rather, he saw the Fed as a way to rationalize and professionalize financial management. However, by reestablishing a central bank, he reopened the door to Hamiltonian Federalism. Immediately after the Fed was founded, there was a serious inflation which in turn led to a depression. By 1920 the public had grown weary of the disruptions in economic life and elected Warren G. Harding and Calvin Coolidge. By 1920, after two decades of Progressivism, there was little memory of the laissez faire ideas of the late nineteenth century. Thus Harding and Coolidge, who succeeded Harding when he died three years into his term, nor Congress, were motivated to repeal the Progressive legislation of Roosevelt and Wilson. Part of the reason was that the more extreme socializing ideas that the Republicans under Roosevelt advocated had not come to pass. Instead, the more conservative approach of William Howard Taft and Woodrow Wilson had led to limited judicial enforcement of the Sherman Anti-trust Act, the Hepburn Act which established railroad rates, and the Federal Trade Commission Act. But these laws had limited effects. On the other hand, they turned out to be a stepping stone to a greater degree of governmental intervention in the economy within 12 years.
The compounding effect of the central bank and the corporate form of organization in generating economic inefficiency and corruption did not begin to be felt for a number of decades. This was accomplished by Franklin D. Roosevelt in the early 1930s. First, FDR abolished the gold standard in 1932. Second, he used the pretext of social democracy to strengthen the federal government, which in turn led to increased availability of credit. This was done through the expansion of the military along with the expansion of the welfare state. Government contracts became available as did increased credit. The stock market began to increase from 1937 onward, and after World War II it began an ascent from which it has never returned. In contrast, the financial markets did not increase from the 1880s until the 1930s. In effect, Roosevelt implemented the Hamiltonian system in full force, but he did so with a cloak. The cloak was that of social democracy. American politics became a debate between two statist visions, both derivative of Progressivism and Federalism. The Republican vision was one of state intervention on behalf of business and opposition to social democracy. The Democratic vision was one of state intervention to regulate business in the name of social democracy but to subsidize business through credit expansion just as Hamilton had suggested in the 1780s. Thus, modern American politics deteriorated into a debate between two Hamiltonian visions, both of which aimed to subsidize inefficient corporations at the expense of a bewildered public.
Hume wrote at a time when corporations did not exist. Corporations did not take their present form until the late nineteenth century, as late as the 1890s. At the time that Hume wrote, merchants who assumed risk did so on their own account, and if they lost money they personally suffered. Thus, there was considerable motivation for rational, profit-maximizing behavior. When central banking was abolished, business needed alternative means to aggregate capital. Corporate organization did so, and it did so by shifting risk away from entrepreneurs and merchants onto investors. This is a more rational method for allocating risk than is central banking because it can reflect personal preferences for risk. Moreover, it permits reflection of a wide range of public preferences. Some people have considerable utility for money in the present because they prefer to consume. Consumers might prefer not to take risks with money but rather to spend it. In contrast, other people have greater utility for money in the future. Such investors can choose to invest more heavily in corporate ventures than a central bank's broad allocation of public resources to specific interests would permit.
Corporate organization might be viewed as an alternative form of capital aggregation to central banking. It is superior because the allocation of risk is explicit. Those who wish to take risks invest in the corporation, while those who do not wish to take risks do not invest. This contrasts with monetary creation by the central bank, which forces all citizens to participate in risky business decisions whether they choose to or not.
But the compounding of the corporate form with central banking might exaggerate risk taking and confound the Humean-Hamiltonian model. Merchants who are not personally at risk may not behave rationally. The result is a potential for corrpution. A corporate president who is granted dollops of credit artificially created by a central bank might be motivated to present false earnings reports, pay himself an exaggerated salary and then resign from the firm before it goes bankrupt, much as the officers of Enron and Bear Stearns did. There is no guarantee of rational behavior by corporate organizations staffed by self interested bureaurcrats. Thus, the subsequent adoption of Hamiltonian Federalism under the Keynesian moniker has gradually led to a crap shoot economy unbridled by rationality and propelled by self-seeking, incompetence and greed.
By 1830 it was evident to most workers that the Central Banking system was not beneficial to them. The Humean and Hamiltonian theory of credit had failed. In particular, banking monopolies led to depreciating currency which in turn led to resentment of the central bank, which President Andrew Jackson abolished in 1832 and 1833. Between 1833 and 1913 there was no central bank, and this was the period of greatest economic creativity in American history. It was also a period of slow business profit, which resulted in repeated complaints about "depressions". Every decade saw increasing real wages and every decade saw a "depression". By the end of the 19th century the average American was much better off, the American economy was the center of world innovation, immigrants flocked here by the millions, but business interests incessantly complained about "depression". Moreover, governmental subsidies to railroads engendered corruption and overexpansion. Post-Civil War monetary inflation facilitated speculation and created income inequality. This occurred at the same time that Jackson's spoils system led to political corruption in the cities.
Many observers felt that rationalization of the state through civil service would improve the economy. The traditional American belief that morality led to economic success was being tested by corruption associated with the railroads and political clubs in the cities. In 1883 Congress passed the Pendleton Act, which created a rudimentary civil service for the federal government. In turn, advocates of moral and limited government, to include the Mugwumps, argued for increased use of civil service, honesty in government, and the gold standard and reduced tariffs. The election of 1884, in which the Mugwumps bolted the Republican Party to support Grover Cleveland, led to Cleveland's election. At the same time, the corporate form of organization facilitated the expansion of industry.
During this period Bismarck in Germany was experimenting with social democracy. Bismarck implemented national health insurance, social security and other social programs. The German historical school of economics argued against the laissez faire economics of Charles Sumner and Adam Smith. Smith, like Hume, argued that there are general laws of economic development. In contrast, the German historical school argued that economic laws are specific to time and place and that generalization is impossible. Moreover, the German historical school assumed that it is possible to rationally guide an economy. This contrasts with Hume's belief that merchants are better equipped to assess investment opportunities than anyone else. It also contrasts with the Whiggish and Jeffersonian belief in countryside entrepreneurs as better equipped to assess investment opportunity than either central planners or elite merchants.
In the late nineteenth century young American academics such as Henry Carter Adams, Richard T. Ely and John R. Commons sought education in the German universities. This was linked to the late nineteenth century Mugwumps' interest in establishing professions. The Mugwumps not only believed in fighting corruption and establishing sound money, but they also had specific professional interests in mind. They wanted to establish standards in academia, law, medicine and other professions. These professional interests became the common thread of modern liberalism. If there is one constant theme from the Mugwumps to todays American Association of University Professors, it is the importance of a college education, professionalism and regulations to establish them. The Mugwumps did not believe in social democracy, but they did believe in rationalization. The German universities were the best in the world, and they thought that if Americans were trained in German universities that they could bring the best methods to bear on American problems. But in social science the German universities were not really so methodologically advanced. The German historical school's emphasis on state-based solutions was a form of romanticism. The Americans who studied in Germany brought some reform ideas to bear on American problems, but combined these with faith in the power the state to solve social problems.
At first the Mugwumps resented the ideas of Richard T. Ely and Henry Carter Adams. As Nancy Cohen points out, Ely, who founded the American Economics Association, was denied tenure and forced to conform to the Mugwumps' expectations. Henry Carter Adams left academia altogether. However, the long term effect was to stimulate support for Progressivism. Ely's student John R. Commons was a central figure in the reform-oriented Wisconsin school, for instance. Progressivism had a number of roots, to include Social Gospel Christianity and Populism, but it was also heavily influenced by Commons's academic theories. Progressivism should not be confused with socialism or social democracy. At times it had elements of these but it included reform ideas of varying kinds.
In 1913, Woodrow Wilson had established the Federal Reserve Bank in order to rationalize the credit markets. Wilson was a supporter of the gold standard and had voted for the Gold Democrats in 1896. He did not anticipate a return to Hamiltonian Federalism. Rather, he saw the Fed as a way to rationalize and professionalize financial management. However, by reestablishing a central bank, he reopened the door to Hamiltonian Federalism. Immediately after the Fed was founded, there was a serious inflation which in turn led to a depression. By 1920 the public had grown weary of the disruptions in economic life and elected Warren G. Harding and Calvin Coolidge. By 1920, after two decades of Progressivism, there was little memory of the laissez faire ideas of the late nineteenth century. Thus Harding and Coolidge, who succeeded Harding when he died three years into his term, nor Congress, were motivated to repeal the Progressive legislation of Roosevelt and Wilson. Part of the reason was that the more extreme socializing ideas that the Republicans under Roosevelt advocated had not come to pass. Instead, the more conservative approach of William Howard Taft and Woodrow Wilson had led to limited judicial enforcement of the Sherman Anti-trust Act, the Hepburn Act which established railroad rates, and the Federal Trade Commission Act. But these laws had limited effects. On the other hand, they turned out to be a stepping stone to a greater degree of governmental intervention in the economy within 12 years.
The compounding effect of the central bank and the corporate form of organization in generating economic inefficiency and corruption did not begin to be felt for a number of decades. This was accomplished by Franklin D. Roosevelt in the early 1930s. First, FDR abolished the gold standard in 1932. Second, he used the pretext of social democracy to strengthen the federal government, which in turn led to increased availability of credit. This was done through the expansion of the military along with the expansion of the welfare state. Government contracts became available as did increased credit. The stock market began to increase from 1937 onward, and after World War II it began an ascent from which it has never returned. In contrast, the financial markets did not increase from the 1880s until the 1930s. In effect, Roosevelt implemented the Hamiltonian system in full force, but he did so with a cloak. The cloak was that of social democracy. American politics became a debate between two statist visions, both derivative of Progressivism and Federalism. The Republican vision was one of state intervention on behalf of business and opposition to social democracy. The Democratic vision was one of state intervention to regulate business in the name of social democracy but to subsidize business through credit expansion just as Hamilton had suggested in the 1780s. Thus, modern American politics deteriorated into a debate between two Hamiltonian visions, both of which aimed to subsidize inefficient corporations at the expense of a bewildered public.
Sunday, May 25, 2008
American Workers Are Worse Off--But Why the Baloney?
The table below lists government data on savings rates, the prime interest rate, inflation and real wages since 1972. It is evident from the real wage data in the last column, which states average hourly earnings in 1982 dollars for all private sector US employees, that wages have fallen over the past 35 years from $9.07 per hour in 1972 (in 1982 dollars) to $8.27. This is an unprecedented decline in US workers' welfare. As can be seen in the table as well, in any year since 1972 inflation has not fallen below 1.0 percent. In six of ten years in the 1980s inflation exceeded 4.0 percent. In five of ten years in the 1990s inflation equaled or exceeded 3.0 percent. In three of eight years in the 2000s inflation exceeded 3.0 percent.
In recent weeks there have been several articles in the New York Sun and Newsweek that argue that Americans' lives have grown more prosperous. No serious data is offered to support this claim. Robert J. Samuelson's Newsweek article offers the following: there are more two-car families; more Americans have cable television; and more students go to college.
However, greater consumption evidences little if indebtedness has increased along with the consumption. More Americans likely have two cars because more women are forced to work because their husbands' salaries are dismal. The second car soaks up a good part of the second income. This is not evidence of prosperity. House prices, which the Bureau of Labor Statistics excluded from the Consumer Price Index in the early 1980s, have escalated until this year and have posed an enormous burden on two-income families. In the book Two Income Trap: Why Middle Class Mothers and Fathers Are Going Broke Elizabeth Warren and Amelia Warren Tyagi show that the economic burden of house payments coupled with two wage earners has been the single greatest source of personal bankruptcy. The reason for the inflated house prices is the same as the flat real wages: inflation that Keynesian economic policies have caused.
Samuelson claims that there is greater risk for workers than before so that workers' sense that they are worse off is but a psychological illusion. It is true that workers face more risk than before 1972. But in most contexts higher returns accompany higher risk, while the American economy has produced both higher risk and lower wages for workers. There is only one meaningful measure of workers' welfare, and that is their real hourly wage adjusted for benefits and risk. But benefits have declined as have real hourly wages and, according to Samuelson, risk has increased. In his attempt to put a positive spin on workers' sad fate Samuelson makes things sound worse.
Why is there so much nonsensical news coverage claiming that Americans are better off when a casual glance at real wage data shows that Americans are in fact worse off? This is not rocket science. Real hourly wages were $9.07 in 1972 and $8.27 in 2007. Americans are worse off, and they have been so since 1972 when Richard M. Nixon declared "We are all Keynesians now".
I ask: why do news media like Newsweek, normally eager to criticize the Bush administration, stack baloney when it comes to Fed policy and inflation? One answer has occurred to me: the media are owned by conglomerates that take on a large amount of debt. Inflationary Fed policies keep interest rates low and so subsidize the debt burden of the same media corporations whose units, like Newsweek, report on the news. As well, low interest rates inflate the stock market, helping media stocks to remain unnaturally high so that executives earn high bonuses. My guess is that the volume of pro-Fed propaganda will increase in media outlets whose owners have greater indebtedness. In other words, my hypothesis is that there is an inverse correlation between support for the current economic situation by newspapers, television stations and magazines and the debt to asset ratio of the corporate parents of the media conglomerates that own them.
Perhaps we should view the opinions of the MSM to have the same value as the dollar. As the dollar declines, our faith in the MSM can decline along with it. In the end, we can haul wheel barrows of Newsweek Magazines along with worthless $100 bills.
Personal Saving as a Percentage of Disposable Personal Income
Year....Saving Rate(1)..Prime Rate(2).CPI(3).Real Hr. Wages(4)
1972........8.9................5.25....................3.2..........9.07
1973.......10.5................6.00....................6.2..........8.85
1974.......10.6................9.75...................11.0..........8.55
1975.......10.6...............10.50....................9.1..........8.44
1976........9.4................7.25....................5.8..........8.63
1977........8.7................6.25....................6.5..........8.68
1978........8.9................7.75....................7.6..........8.65
1979........8.9...............11.75...................11.3..........8.23
1980.......10.0...............15.25...................13.5..........7.94
1981.......10.9...............21.50...................10.3..........7.84
1982.......11.2...............15.75....................6.2..........7.92
1983........9.0...............11.50....................3.2..........7.97
1984.......10.8...............11.00....................4.3..........7.95
1985........9.0...............10.75....................3.6..........7.91
1986........8.2................9.50....................1.9..........7.97
1987........7.0................7.50....................3.6..........7.86
1988........7.3................8.75....................4.1..........7.80
1989........7.1...............10.50....................4.8..........7.74
1990........7.0...............10.50....................5.4..........7.57
1991........7.3...............10.00....................4.2..........7.57
1992........7.7................6.50....................3.0..........7.53
1993........5.8................6.00....................3.0..........7.54
1994........4.8................6.00....................2.6..........7.54
1995........4.6................8.50....................2.8..........7.57
1996........4.0................8.50....................3.0..........7.59
1997........3.6................8.25....................2.3..........7.79
1998........4.3................8.50....................1.6..........7.95
1999........2.4................7.75....................2.2..........8.02
2000........2.3................9.50....................3.4..........8.08
2001........1.8................9.50....................2.8..........8.24
2002........2.4................4.75....................1.6..........8.29
2003........2.1................4.25....................2.3..........8.29
2004........2.1................4.00....................2.7..........8.21
2005........0.5................5.25....................3.4..........8.18
2006........0.4................7.25....................3.2..........8.33
2007........0.4................8.25....................2.8..........8.27
(1) Source: http://www.bea.gov/national/nipaweb/TableView.asp?SelectedTable=58&ViewSeries=NO&Java=no&Request3Place=N&3Place=N&FromView=YES&Freq=Year&FirstYear=1971&LastYear=2008&3Place=N&Update=Update&JavaBox=no
(2) Source: http://mortgage-x.com/general/indexes/prime.asp
(3) Source: Department of Labor, BLS, CPI increases
(4) Source, Department of Labor, BLS, Average Hourly Earnings http://data.bls.gov/PDQ/servlet/SurveyOutputServlet
In recent weeks there have been several articles in the New York Sun and Newsweek that argue that Americans' lives have grown more prosperous. No serious data is offered to support this claim. Robert J. Samuelson's Newsweek article offers the following: there are more two-car families; more Americans have cable television; and more students go to college.
However, greater consumption evidences little if indebtedness has increased along with the consumption. More Americans likely have two cars because more women are forced to work because their husbands' salaries are dismal. The second car soaks up a good part of the second income. This is not evidence of prosperity. House prices, which the Bureau of Labor Statistics excluded from the Consumer Price Index in the early 1980s, have escalated until this year and have posed an enormous burden on two-income families. In the book Two Income Trap: Why Middle Class Mothers and Fathers Are Going Broke Elizabeth Warren and Amelia Warren Tyagi show that the economic burden of house payments coupled with two wage earners has been the single greatest source of personal bankruptcy. The reason for the inflated house prices is the same as the flat real wages: inflation that Keynesian economic policies have caused.
Samuelson claims that there is greater risk for workers than before so that workers' sense that they are worse off is but a psychological illusion. It is true that workers face more risk than before 1972. But in most contexts higher returns accompany higher risk, while the American economy has produced both higher risk and lower wages for workers. There is only one meaningful measure of workers' welfare, and that is their real hourly wage adjusted for benefits and risk. But benefits have declined as have real hourly wages and, according to Samuelson, risk has increased. In his attempt to put a positive spin on workers' sad fate Samuelson makes things sound worse.
Why is there so much nonsensical news coverage claiming that Americans are better off when a casual glance at real wage data shows that Americans are in fact worse off? This is not rocket science. Real hourly wages were $9.07 in 1972 and $8.27 in 2007. Americans are worse off, and they have been so since 1972 when Richard M. Nixon declared "We are all Keynesians now".
I ask: why do news media like Newsweek, normally eager to criticize the Bush administration, stack baloney when it comes to Fed policy and inflation? One answer has occurred to me: the media are owned by conglomerates that take on a large amount of debt. Inflationary Fed policies keep interest rates low and so subsidize the debt burden of the same media corporations whose units, like Newsweek, report on the news. As well, low interest rates inflate the stock market, helping media stocks to remain unnaturally high so that executives earn high bonuses. My guess is that the volume of pro-Fed propaganda will increase in media outlets whose owners have greater indebtedness. In other words, my hypothesis is that there is an inverse correlation between support for the current economic situation by newspapers, television stations and magazines and the debt to asset ratio of the corporate parents of the media conglomerates that own them.
Perhaps we should view the opinions of the MSM to have the same value as the dollar. As the dollar declines, our faith in the MSM can decline along with it. In the end, we can haul wheel barrows of Newsweek Magazines along with worthless $100 bills.
Personal Saving as a Percentage of Disposable Personal Income
Year....Saving Rate(1)..Prime Rate(2).CPI(3).Real Hr. Wages(4)
1972........8.9................5.25....................3.2..........9.07
1973.......10.5................6.00....................6.2..........8.85
1974.......10.6................9.75...................11.0..........8.55
1975.......10.6...............10.50....................9.1..........8.44
1976........9.4................7.25....................5.8..........8.63
1977........8.7................6.25....................6.5..........8.68
1978........8.9................7.75....................7.6..........8.65
1979........8.9...............11.75...................11.3..........8.23
1980.......10.0...............15.25...................13.5..........7.94
1981.......10.9...............21.50...................10.3..........7.84
1982.......11.2...............15.75....................6.2..........7.92
1983........9.0...............11.50....................3.2..........7.97
1984.......10.8...............11.00....................4.3..........7.95
1985........9.0...............10.75....................3.6..........7.91
1986........8.2................9.50....................1.9..........7.97
1987........7.0................7.50....................3.6..........7.86
1988........7.3................8.75....................4.1..........7.80
1989........7.1...............10.50....................4.8..........7.74
1990........7.0...............10.50....................5.4..........7.57
1991........7.3...............10.00....................4.2..........7.57
1992........7.7................6.50....................3.0..........7.53
1993........5.8................6.00....................3.0..........7.54
1994........4.8................6.00....................2.6..........7.54
1995........4.6................8.50....................2.8..........7.57
1996........4.0................8.50....................3.0..........7.59
1997........3.6................8.25....................2.3..........7.79
1998........4.3................8.50....................1.6..........7.95
1999........2.4................7.75....................2.2..........8.02
2000........2.3................9.50....................3.4..........8.08
2001........1.8................9.50....................2.8..........8.24
2002........2.4................4.75....................1.6..........8.29
2003........2.1................4.25....................2.3..........8.29
2004........2.1................4.00....................2.7..........8.21
2005........0.5................5.25....................3.4..........8.18
2006........0.4................7.25....................3.2..........8.33
2007........0.4................8.25....................2.8..........8.27
(1) Source: http://www.bea.gov/national/nipaweb/TableView.asp?SelectedTable=58&ViewSeries=NO&Java=no&Request3Place=N&3Place=N&FromView=YES&Freq=Year&FirstYear=1971&LastYear=2008&3Place=N&Update=Update&JavaBox=no
(2) Source: http://mortgage-x.com/general/indexes/prime.asp
(3) Source: Department of Labor, BLS, CPI increases
(4) Source, Department of Labor, BLS, Average Hourly Earnings http://data.bls.gov/PDQ/servlet/SurveyOutputServlet
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