Posts Tagged ‘business’

Ten Reforms to Save America: Reform Number Four

Saturday, November 19th, 2011

Is This How It Works?

Whatever we may do about the limiting of congressional terms, or the length of service of Congressional staff, one of the main reasons to tackle that problem is the revolving door between Congress and the lobbying interests in Washington DC.  Whether representing trade groups, corporations, unions, or other groups, the problem is that the lobbyists often know the lay of the land, both physical and political, better than many members of Congress.  Too often, members and staff leave those offices to become lobbyists, and with equal frequency, we find lobbyists becoming Congressional staff.  This cozy relationship will be ended only by doing something drastic:  We must enact a lifetime ban on lobbyists from serving in government, and government  officials or staff from going to work in the lobbying racket.

Once again, I can hear the squealing of all the pigs at the DC troughs: “You can’t do this to us!”  Yes, we the people can.  When most Americans think of politicians leaving office for the private sector, they think of them returning to work in some profession or field that takes them back home, away from Washington DC.  All too often, when politicians depart government service, where they land is in some lobbying firm.  This frequently applies to staff too.  For most Americans, this isn’t considered to be “private sector employment,” but instead merely “public sector looting.”  It’s part of what makes Washington DC stink of corruption, and most Americans suspect it is the reason we have so many complex and convoluted laws.  Naturally, the American people are right about that, but in most cases, they have only the a glimpse of how thorough the corruption is.

The other problem is that the American people have been conditioned to view lobbyists as the source of the problem.  They’re not.  Lobbyists are a symptom just like the runny nose, achy muscles and spiking fever that tells you you’ve been infected with influenza.  The virus is already there, and while you can treat the symptoms, and it will at least make you feel better, your body still must combat the illness or you’ll never recover.  Everybody harbors and image in their mind’s eye of some lobbyist, a briefcase full of cash, and some elected or appointed official waiting greedily to be in receipt of the loot.  The problem is, this isn’t what actually happens in most cases.  Outright bribery of that sort would be caught fairly easily, and the people involved would be dealt with under existing law.  It’s not to say this never happens, because it does, but that’s a fairly stupid politician or lobbyist who gets caught in that fashion.

Instead, there are other ways to enrich themselves, and most involve a kind of extortion racket, or kick-backs, or insider information to be used for personal profit.  Imagine you’re a business, and imagine  the business you’re in is one regulated in some fashion by the federal government(but which industry isn’t?)  Imagine that some politician introduces a bill that you know will effectively destroy your company, or make it easier for a competitor to displace you in the market?  Your inevitable response would be to play self-defense, and you would do that by lobbying Congress.  You might contribute to campaigns and parties, but in all cases, you’d try to make happy everybody who holds your business in the palms of their hands.  This kind of extortion racket is common, and what you discover is that the number of legal contributions “enticed” by this method is scandalous.

Naturally, this works the other way too, as a matter of offense.  Do you need a “competitive edge” in the market?  No problem for Congress.  They just pass a bill that either directly or indirectly fouls the business of your competitors, and “Bingo!” To ensure a Presidential signature, you make sure the provision is attached to the most popular legislation, or at least something certain to get the approval of those who run the show.

Imagine yours is a large concern.  One way to pay off folks for their good deeds on your behalf is to provide them information that will enable them to make a killing in the markets.  A bit of info here, and a little investment there, and before you know it: Instant Congressional millionaire.  Of course, the member just happened to “get lucky” in the market.  Consider how frequently members of Congress get in on the Initial Public Offering of stock in a company commencing public trading.  It’s obscene.  It’s not easy to get in on an IPO for most people, and insider information is frequently a good head-start.  Some have suggested that Congress ought to be forbidden from investing in things related to that on which they’re currently legislating, but the problem with this approach is that the Congress now legislates on every matter under the sun.

Apart from the ban on lobbying, there is something more we can add to this reform, and that is to require members of Congress and their staff to convert their investments into cash savings.  That way, as the value of the dollar goes, so goes the value of their savings.  Under such a regime, the Congress would have every reason to safeguard the value of the dollar by prudent fiscal policies, and you could bet they’d be eye-balling the Federal Reserve a good deal more closely.  Many suggest the use of blind trusts, but the problem is that most things called “blind trusts” aren’t really blind at all, as Governor Sarah Palin recently pointed out in an op-ed in the Wall Street Journal.

Of course, all of these suggested reforms still only address part of the issue.  The biggest part of the problem is that Congress is involved too deeply in business at all levels, and in all respects.  This has become the biggest problem we face: As long as Congress can stick its nose into any business for any reason at all, to impose their notion of “regulating interstate commerce” as they see fit, under whatever outrageous definition they concoct, and with courts willing to interpret the Constitution that way, we’re in serious trouble.  It means they will always have some way to dig their claws into not only business, but also into our lives and our pockets.  We need a wall of separation between business and state at least as thorough as the one that’s been erected between church and state.  If we wish to save America, we’ll need to tackle this too.




Barnhardt Capital Management Closes Down With Stunning Announcement

Friday, November 18th, 2011

Ann Barnhardt

Ann Barnhardt has run her grain and livestock brokerage for years, but now, she’s “Going Galt.”  This reminds me very much of the character “Midas Mulligan” from Ayn Rand’s Atlas Shrugged, and it’s no coincidence that she has chosen this moment to shut down her company.  After years of watching the Obama administration and its cronies looting the capital markets, Barnhardt has made the moral decision to shut down operation since in the current environment, she can no longer safeguard her clients’ capital against the predatory tendencies of this administration, and its henchmen in the markets.  As I have told you before, this is being done intentionally: Our country is being destroyed by design.

Apparently, Ms. Barnhardt is the first courageous broker to say this flatly, and to make plain that she no longer has confidence in the rule of law since the federal government now makes it up as it goes along.  In such an environment, nobody can do business, because every transaction is subject to the whimsical prerogatives of government bureaucrats, and nothing is certain.  If contracts have no meaning, because they will not be enforced, and if government can reach back in time to retroactively steal funds, there is no safe market anywhere any longer.

Rather than tell you what Ms. Barnhardt said, I’m going to provide her notice completely:

BCM Has Ceased Operations (source)
Posted by Ann Barnhardt – November 17, AD 2011 10:27 AM MST

Dear Clients, Industry Colleagues and Friends of Barnhardt Capital Management,

It is with regret and unflinching moral certainty that I announce that Barnhardt Capital Management has ceased operations. After six years of operating as an independent introducing brokerage, and eight years of employment as a broker before that, I found myself, this morning, for the first time since I was 20 years old, watching the futures and options markets open not as a participant, but as a mere spectator.

The reason for my decision to pull the plug was excruciatingly simple: I could no longer tell my clients that their monies and positions were safe in the futures and options markets – because they are not. And this goes not just for my clients, but for every futures and options account in the United States. The entire system has been utterly destroyed by the MF Global collapse. Given this sad reality, I could not in good conscience take one more step as a commodity broker, soliciting trades that I knew were unsafe or holding funds that I knew to be in jeopardy.

The futures markets are very highly-leveraged and thus require an exceptionally firm base upon which to function. That base was the sacrosanct segregation of customer funds from clearing firm capital, with additional emergency financial backing provided by the exchanges themselves. Up until a few weeks ago, that base existed, and had worked flawlessly. Firms came and went, with some imploding in spectacular fashion. Whenever a firm failure happened, the customer funds were intact and the exchanges would step in to backstop everything and keep customers 100% liquid – even as their clearing firm collapsed and was quickly replaced by another firm within the system.

Everything changed just a few short weeks ago. A firm, led by a crony of the Obama regime, stole all of the non-margined cash held by customers of his firm. Let’s not sugar-coat this or make this crime seem “complex” and “abstract” by drowning ourselves in six-dollar words and uber-technical jargon. Jon Corzine STOLE the customer cash at MF Global. Knowing Jon Corzine, and knowing the abject lawlessness and contempt for humanity of the Marxist Obama regime and its cronies, this is not really a surprise. What was a surprise was the reaction of the exchanges and regulators. Their reaction has been to take a bad situation and make it orders of magnitude worse. Specifically, they froze customers out of their accounts WHILE THE MARKETS CONTINUED TO TRADE, refusing to even allow them to liquidate. This is unfathomable. The risk exposure precedent that has been set is completely intolerable and has destroyed the entire industry paradigm. No informed person can continue to engage these markets, and no moral person can continue to broker or facilitate customer engagement in what is now a massive game of Russian Roulette.

I have learned over the last week that MF Global is almost certainly the mere tip of the iceberg. There is massive industry-wide exposure to European sovereign junk debt. While other firms may not be as heavily leveraged as Corzine had MFG leveraged, and it is now thought that MFG’s leverage may have been in excess of 100:1, they are still suicidally leveraged and will likely stand massive, unmeetable collateral calls in the coming days and weeks as Europe inevitably collapses. I now suspect that the reason the Chicago Mercantile Exchange did not immediately step in to backstop the MFG implosion was because they knew and know that if they backstopped MFG, they would then be expected to backstop all of the other firms in the system when the failures began to cascade – and there simply isn’t that much money in the entire system. In short, the problem is a SYSTEMIC problem, not merely isolated to one firm.

Perhaps the most ominous dynamic that I have yet heard of in regards to this mess is that of the risk of potential CLAWBACK actions. For those who do not know, “clawback” is the process by which a bankruptcy trustee is legally permitted to re-seize assets that left a bankrupt entity in the time period immediately preceding the entity’s collapse. So, using the MF Global customers as an example, any funds that were withdrawn from MFG accounts in the run-up to the collapse, either because of suspicions the customer may have had about MFG from, say, watching the company’s bond yields rise sharply, or from purely organic day-to-day withdrawls, the bankruptcy trustee COULD initiate action to “clawback” those funds. As a hedge broker, this makes my blood run cold. Generally, as the markets move in favor of a hedge position and equity builds in a client’s account, that excess equity is sent back to the customer who then uses that equity to offset cash market transactions OR to pay down a revolving line of credit. Even the possibility that a customer could be penalized and additionally raped AGAIN via a clawback action after already having their customer funds stolen is simply villainous. While there has been no open indication of clawback actions being initiated by the MF Global trustee, I have been told that it is a possibility.

And so, to the very unpleasant crux of the matter. The futures and options markets are no longer viable. It is my recommendation that ALL customers withdraw from all of the markets as soon as possible so that they have the best chance of protecting themselves and their equity. The system is no longer functioning with integrity and is suicidally risk-laden. The rule of law is non-existent, instead replaced with godless, criminal political cronyism.

Remember, derivatives contracts are NOT NECESSARY in the commodities markets. The cash commodity itself is the underlying reality and is not dependent on the futures or options markets. Many people seem to have gotten that backwards over the past decades. From Abel the animal husbandman up until the year 1964, there were no cattle futures contracts at all, and no options contracts until 1984, and yet the cash cattle markets got along just fine.

Finally, I will not, under any circumstance, consider reforming and re-opening Barnhardt Capital Management, or any other iteration of a brokerage business, until Barack Obama has been removed from office AND the government of the United States has been sufficiently reformed and repopulated so as to engender my total and complete confidence in the government, its adherence to and enforcement of the rule of law, and in its competent and just regulatory oversight of any commodities markets that may reform. So long as the government remains criminal, it would serve no purpose whatsoever to attempt to rebuild the futures industry or my firm, because in a lawless environment, the same thievery and fraud would simply happen again, and the criminals would go unpunished, sheltered by the criminal oligarchy.

To my clients, who literally TO THE MAN agreed with my assessment of the situation, and were relieved to be exiting the markets, and many whom I now suspect stayed in the markets as long as they did only out of personal loyalty to me, I can only say thank you for the honor and pleasure of serving you over these last years, with some of my clients having been with me for over twelve years. I will continue to blog at, which will be subtly re-skinned soon, and will continue my cattle marketing consultation business. I will still be here in the office, answering my phones, with the same phone numbers. Alas, my retirement came a few years earlier than I had anticipated, but there was no possible way to continue given the inevitability of the collapse of the global financial markets, the overthrow of our government, and the resulting collapse in the rule of law.

As for me, I can only echo the words of David:

“This is the Lord’s doing; and it is wonderful in our eyes.”

With Best Regards-
Ann Barnhardt

Ladies and gentlemen, make no mistake about it: This is a sign of the end of our way of life as we have known it.  When diligent people assess the state of the country, the government, and the law, arriving at the conclusion that there is no basis for confidence in any of these, and making the moral choice to cease doing business, you are looking at the end of a civilization.  We have known for more than a century that the statists would use our own financial markets, our banks, and our commodity markets against us as the trigger for total collapse, but now that day has arrived.  Ms. Barnhardt’s courage in stating the truth should be commended, but her most important points must be understood in the context of a woman who has stopped.  She has refused to participate in a market dominated by looting, graft, corruption, and lawlessness, where government does nothing to uphold law, and instead merely makes law on any basis it decides, by dictates.

I am proud of Ms. Barnhardt, and for those who think she has quit, I would say to you that she hasn’t quit.  She’s made the moral choice that one cannot deal in a market without laws and without fixed, predictable rules that will hold up in all conditions.  Put another way, imagine sitting in at a game of Blackjack, where the dealer makes up the rules, or changes them, without any rhyme or reason except to take more of your money.  How long would you remain at such a table?  What Ms. Barnhardt has done here is to tell the dealer to shove it.  I don’t blame her.  She’s my new hero, and I can only hope men and women of courage throughout the market will now join her.

National Defense Faces Severe Cuts

Monday, November 7th, 2011

A Scalpel or a Sword?

As you will may remember from the Debt Ceiling debacle in early August, the deal then worked out has some automatic triggers.  If the Super Committee created by the legislation fails to produce sufficient spending cuts, those triggers will kick in and cuts will be forced upon Congress.  The biggest target of these cuts is the defense budget, and as the New York Times is reporting,  it’s Leon Panetta who is now considering what those cuts will be.  This is one of the most despicable parts of our current budget morass, and it’s astonishing that nobody much seems to notice:  One of the few legitimate functions of government is the national defense, and yet among all the things to be cut, defense will be hit the most deeply.  I have no problem with an examination of the necessities of our defense spending, but I’m also aware that while government spends money on all sorts of things for which it has no actual constitutional authority, defense is clearly one of the budget categories for which the federal government exists.  In part, this is the result of the can-kicking in which Boehner and House Republicans joined by making their deal with the devil in August, but it’s also the built-in result of generations of governmental growth in other areas of expenditure.

Defense spending now stands at approximately $700 billion.   That’s an astonishing number that is as large as the entire federal budget just thirty years ago.  Part of that number owes to our engagements in Afghanistan and Iraq, with the actual baseline spending for defense being $530 billion.  That’s still an incredible amount of money, but it is only $130 billion(yes, “only”) more than the defense budget at the height of the Reagan administration, but in inflation-adjusted dollars, it’s actually less.  Defense constitutes the largest single line-item in the discretionary portion of the budget, but the entitlements, in the non-discretionary budget, have begun to dwarf the spending on defense.  Social Security is a larger program, and Medicare and Medicaid together exceed the total defense spending.  It should seem odd to Americans that programs for which there is no clear constitutional authorization are considered “non-discretionary,” while programs that are most definitely among the legitimate roles of our federal government are considered “discretionary.”

What this means is that we don’t have a choice on a year-to-year basis about those items in the non-discretionary budget.  We are going to spend to support them, because previous legislation has mandated it.  Discretionary budget items are those that are adjusted on an annual basis, and not necessarily tied to previous legislation.  You can look at it this way for simplicity’s sake:  Non-discretionary spending is comprised of entitlement programs.  Discretionary spending is comprised of everything else.  In our federal budget, non-discretionary spending is roughly twice the size of discretionary spending.

I am certain defense can be trimmed without hampering the nation’s immediate defenses, but I am less certain that over the long run, we can maintain a force capable of deterring and repelling enemies around the globe.  Even in the midst of a deep recession, we are having difficulties with recruiting and retention of military personnel.  This is because just like any other large organization, most of the defense budget is actually spent on salaries and benefits for our Soldiers, Sailors, Airmen, and Marines. In precisely the same way that the CEO of a large corporation will make cuts to employees first, mainly because it’s the biggest single operational cost, the Defense Department suffers from the same basic problem: Service-members cost a great deal, and a good deal more than their already pathetic pay and benefits represent.  Training costs are phenomenal, and the costs of supporting units in the field are huge.

Many will suggest, naively, that we simply “buy a few less $400 toilet seats.”  While that makes for a good laugh line, the reality is that the defense budget has finally managed to clean up most of those sorts of egregious expenditures over the last decade or so, largely because the Defense Department has had no choice.  Still, there are matters that should be examined, like the billions of dollars simply missing, and other problems with big-ticket line items.  Nevertheless, in our dangerous world, there is an ever-escalating competition between us and our would-be and real enemies, where high technology will be contribute directly to reducing the number of flag-draped caskets that arrive at Andrews AFB during each future engagement.  This sobering recognition is among the reasons that any such spending cuts in the military budget must be accomplished as some might say, “not with a machete, but with a scalpel.”  We must be certain that whatever cuts we make do not leave us naked to attacks, and that when we do engage in warfare,  our troops are given every advantage we can provide to win with minimal losses.

One of the areas in which Secretary Panetta is looking for cuts to defense is in the area of medical and other benefits, in addition to gross payroll.   That’s a mistake.  We already have difficulties attracting people to serve in the military, and this too can have a dramatic affect on morale, and readiness.  In truth, to make the level of cuts they’re intending, nearly $200 billion annually, we’re going to be forced to withdraw from virtually all overseas engagements and forward locations.  This poses another danger, inasmuch as we may be slower to respond to crises around the globe, and we may be less able to react when things go awry in one theater of operations or another.  We can ill-afford to be caught short again, because the direction of global terrorism is marching toward weapons of mass destruction.  The 9/11 attacks of 2001 were just a sample of the sort of mayhem the terrorists around the globe are going to be able to create, and this says nothing of our strategic adversaries such as Russia, China, and several others.

This impending doom for the DoD makes plain the problem with our current budgetary priorities.  We are spending far too heavily on entitlement programs of every description, and it will no begin to affect our nation’s defenses.  There are those who argue that the military should be cut, but they don’t think in terms of scalpels or even machetes, but guillotines.  This short-sighted approach is surely destined to create a situation in which we will face increased vulnerabilities on some fronts, and escalating troubles with recruitment and retention.  Our fighting forces deserve the best equipment and training we can afford, but now the question is:  What can we afford?  The answer to this question is likely to be unsatisfactory, because too many politicians derive too much support by virtue of entitlement spending, and while the argument could be made that there is a certain element of the same thing with the defense budget where it comes down to large bases and projects, it’s also true that they aren’t so concerned about the costs in morale and readiness for ordinary soldiers.  What the American people must begin to recognize is that we’ve blown our budget not so much by virtue of military spending, but because we’ve over-extended our social spending to such a degree that it is now squeezing out defense.  There’s something terribly wrong in our thinking when we look at military spending as “discretionary” but Medicaid as “non-discretionary.”  What is our government here to do, after all?  Now we’ve been reduced to the near inevitability that a big-government liberal, Leon Panetta, is going to be hacking away at our nation’s defenses.  We should all be worried at this prospect.

Lies, Damned Lies, and Unemployment Rates

Saturday, November 5th, 2011

Had Enough Yet?

The Obama Administration’s Bureau of Labors Statistics published the October unemployment numbers on Friday, and to the somewhat uninformed, the numbers might seem improved, if not wonderful.  Unemployment fell to 9.0%, down a tenth of one point from the previous month, and 80,000 jobs were created.  Good news, right?  Not so fast.  When our economy is limping along, we create at least 250,000 jobs per month, but when the economy is really running well, we should expect to see job creation numbers in the range of one-half million per month.  More, examining the unemployment numbers closely, you realize that something is wrong:  They’re adjusting the size of our overall workforce downward, so that mathematically, it must look better in each successive statistical period.  The BLS did a gross adjustment at the end of last year, and they’ve been tweaking it all along.  What they’re doing essentially eliminates the long-term unemployed from the workforce, assuming they have retired or otherwise no longer seek employment.  If you’ve been unemployed for any significant period of time, they’re simply not going to count you any longer.

What you need to understand is that in order to make it appear as though the overall employment picture is improving, this administration is pushing the BLS to make things look less dire than they are in fact.  One way to combat the dis-information is to refer people to John Williams’ excellent Shadow Government Statistics ( website.  To receive all of his reports, there is a substantial fee, but what he provides for free is educational and important for people who generally follow the headlines, but seldom delve into the details.

Courtesy of

The chart at left is from his site, through the month of October, 2011.  There are three lines on the chart, and it is important to understand what they represent.  Once you understand what they mean, it’s astonishing to realize just how dishonest our government has become in reporting statistical data on matters of inflation and unemployment.  The red line (U3) represents the official statistic provided by the Bureau of Labor Statistics.  The gray line represents a broader measure(U6) that includes short-term discouraged workers, and underemployed workers who have taken lower-paying, usually part-time work to have any job at all.

The blue line (SGS Alternate) is the most realistic number on the chart, because it reflects the real situation, and doesn’t attempt to write down the size of the total workforce as is done by the BLS.  In 1994, the Bureau of Labor Statistics officially defined long-term discouraged workers out of existence, and with the labor force tinkering the BLS has been doing, all of this presents a rosier picture than exists in fact.  Real unemployment now stands at over 22%.  Ladies and gentlemen, that rivals the unemployment seen in the worst days of the Great Depression.  We are at an unprecedented level of unemployment among men, African-Americans and teenagers/students.  This is a disaster, and it is largely the result of a president who seems intent upon making it worse, in my view to radicalize more of our population, making revolutionary sentiment more prevalent.  This is all adding to a highly destabilized country, and as the chart makes plain, it’s only growing worse.

When the shills for the Obama administration tell you that we’re in a recovery, and the economy is on the mend, you already suspect it is dishonest, because you don’t see any improvements.  Now you know why you feel that way, and it’s not merely a “gut feeling” or “intuition.”  It’s simple fact:  As this government lies to you about the state of the economy, they intend to run for re-election and use this crisis of their own manufacture to prod the uninformed folks along in their direction.  What do you think is the real meaning of the Occupy protests?  Why do you think the Soros/Obama crowd is funding and supporting these protests?  They need an army of radicals to carry out their Marxist designs, and this is part of their long-tended strategy to accomplish that goal.  “Lies, damned lies, and statistics” is the old lament, and now you know why the last of these can be so dangerous.

Note to Occupiers: Wake Up!

Thursday, October 27th, 2011

Upholding the World

It’s time for you to grasp reality.  Not your morality, nor mine, but objective reality.  It’s time to cast off the childish wishing that your putative leaders have been pushing.  It’s time for you to recognize that there are no free lunches, no free money, and that there can be no Utopia on this Earth.  For once, I’m asking you to do what your leaders will not: I’m asking you to think.  I’m asking you to consider the real meaning of what they’ve been telling you and what they really intend.  Because I believe you have been misled, some of you rank-and-file occupiers, I want to give you the tool you need to understand the concept of money in a way you may have never understood it before.  You already have minds, which is the most important tool humans possess, but it’s time to put it to work as you have never done before.  Euro Pacific Capital CEO Peter Schiff tried to tell you, but instead of listening to what he was saying, you tried to shout him down.  He was offering you the most valuable information in the last two hundred years of human history, and you ignored him, or shouted at him without recognizing the great value he was providing you, for free.  I intend to offer you the same knowledge in a different form.

I believe that part of the problem in the situation with Schiff was that a sort of mob mentality took over, and people simply couldn’t hear what he was saying because the emotional mood of the crowd wouldn’t permit them to hear it or acknowledge it, let alone contemplate or understand it.  In order to give you a second chance, when no crowd is gathered, and you’re alone with your thoughts, I’ve posted a page that contains a timeless book excerpt with which your teachers and professors should have made you familiar, but chose instead to conceal from many or even most of you.  If you’ve never read it before, please do so now and consider its full meaning.  Even at this late date, we still have a chance to save this country, but salvation will not come on the streets of New York.  Instead, it will be born of great minds and a firm understanding of the morality of money. <<< Read it. Save your life while it’s still possible.

Once you understand that, you’ll understand why the protests in which you are now participating on Wall Street and around the country are actually statements against the world you so desperately need.  You won’t get what you want through this OWS movement, and what you must discover is that your adversaries aren’t so much on Wall Street as they are on either end of Pennsylvania Avenue in Washington DC.  You’re being used, and if you permit them, they will quite literally use you to death.  It’s their modus operandi, and if they weren’t so interested in concealing that from you for what should become increasingly obvious reasons, you’d know that they’re planning to serve you up like chum for sharks.  You needn’t go out that way.  There is an alternative, but if you are to avoid what your alleged “leaders” and those who fund them have in store, you’re going to need to realize the facts.  This is your chance.  You won’t get many more.

Rick Perry Says Something Refreshingly Honest

Thursday, October 27th, 2011

Damn Right!

The left will doubtless make all the hay they can from this, but the truth is that for once, I think Rick Perry is to be credited for speaking the truth in a bold way. He said “I don’t care” if his tax plan helps the rich.  Kudos to Rick Perry.  Here’s the thing, and it’s a point I’d try to make to every whining ne’er-do-well now Occuping Wall Street.  Now, he could really impress me and say something more important, like “You’re damned right it does, and it should. Who do you think creates jobs? Occu-pests?”  This endless assault on wealth is more than it seems, and less intellectually-bound than it pretends.  It’s a form of  cannibalism, and it’s aimed at destroying more than the wealth it pursues:  It’s about destroying reason.  It’s about disguising something, too.  Behind all of the complaints about the “greed” of the rich is the sickly confession of those who haven’t had the diligence, the discipline, or the desire to make it on their own.  I’m going to say it without reservation:  If you’re not rich, but you really want to be, in this country you have nobody to blame but yourself and your friends in government.  For a change, Rick Perry got it right.

Wealth is produced not by claims of need, or demands at gunpoint, but by the efforts of honest, diligent people.  When I say “honest,” it is in the sense that they understand you cannot consume more than you produce without eventually destroying yourself and yielding your life.  Nothing in the world is free – not even hope.  Manna may have fallen from the heavens in Moses’ day, but in the world around us, there is nothing that will feed you if you are unwilling to expend effort for it, except a government program, but the truth of that, as every working person knows, is that somebody is paying, even if that somebody isn’t you.  Most range-of-the-moment thinkers will see that as an opportunity to get by, but those of us who produce our daily bread look on it somewhat differently.  We see a vast moral vacuum where a human conscience should be, when an able-bodied person permits him or herself to become a perpetual ward of the state.

What Rick Perry admitted is something we should all know:  It’s none of our business how much money others earn.  In my view, a fair tax system would take the federal budget, divide it by the population, and send out the bills with guardians responsible for  dependents’ shares.   That’s a tax reform I could get behind.  Of course, that would eat a hole in some families’ budgets.  I think everybody should have some “skin in the game.”  Do the math: The federal budget is some 3.5 trillion and the population is roughly 320 million.  That’s roughly $11k for every man, woman, and child. Guess what?  In my household, that would be a tax cut.  Of course, there’s just me and my wife.  Still, why shouldn’t you pay your way? Besides, it’s my bet that if you saw an equal share of the burden, you’d be in no hurry to see it increased.

Okay, so you wish to exempt social security recipients from paying? Fine. There are roughly 50 million of them.  So let’s adjust our numbers:  $3.5 trillion divided by (320-50)=270 million payers, giving you an average tax bill of nearly $13K.  Anybody else you wish to exempt?  Food stamp recipients? Fine. There are 45 million of those, so let’s adjust our numbers again: $3.5 trillion divided by an adjusted population of  (270-45)=225 million taxpayers.  Now the tax bill per man, woman and child is $15,555.55.  Get the point?  Nothing is free.  Nothing.  You want to get it from “the rich”?  Let’s seize the total assets of a billionaire. Let’s say he’s worth a billion, even.  Of course, you’ll only be able to get this from him one time, because after that, he’s broke, but let’s do the math.  Let’s just take that billion off the top.  That reduces our total bill from $3.5 Trillion to  $3.499 Trillion. Fine. Now, we’ll need to adjust the numbers accordingly: $3.499Trillion divided among 225 million people. Okay, so how did this complete seizure of a billion dollars help the other 225 million taxpayers?  It reduced our bill from $15,555.55 to $15,551.11.  Feel better?  We just took all the assets of a guy who employed people, turned him into a pauper, and saved a whopping $4.44 on each of our tax bills.  Of course, we should have subtracted him out of the taxpayers, because now he’s on foodstamps.

The point, if you’ve managed to miss it in all of this, is that seizing wealth from the so-called “rich” really makes no difference. You can do it exactly once.  You simultaneously create more poverty, more unemployment, and more dependency, while reducing the taxpayer base.  Do you see why redistributionist policies cannot work?

People whine about the rich, but if the rich had more of their money to spend and invest, guess what?  There would be many more jobs.  I think we should eliminate corporate taxes, too.  I think we should get government out of the way of the formation of capital.  I think we should get rid of regulatory bureaucracies that are choking off prosperity in this country.  The truth is that our problems, while severe, are not insurmountable.  We can still fix things, but we need to get control of our government.  While the Occupy Wall Street crowd continues its protest, the people really at the root of the misery that confronts us are preparing to cash in, again.  They’re using the OWS protests as cover.

Reality is hell for those who “suck at math.”  Rick Perry’s right in this instance: I don’t care if the tax burden on the rich is reduced. The top 1% already pay 40% of all the income taxes collected.  That’s sinful, and the sin is accrued by those who live from the fat of  this inequality.

Greenspan Gets One Right; Blows Up on Taxes

Wednesday, October 26th, 2011

Once Upon a Time...

Maybe the problem is that when Greenspan is actually in charge of something, he loses his competence. I don’t know. Back in the 1960s, he got it. Back when I was in diapers, this man exercised a fertile mind.  Then, he was an unabashed advocate of capitalism and liberty.  Somewhere on his way to becoming the chairman of the Federal Reserve, he lost his way.  Now that he’s been out of there a while, it seems like he’s slowly coming back to his senses.  He offered an in-depth analysis of the Euro Crisis, and I find it to be fairly close to the mark in most respects, but it also seems to be a scathing reproach to some of his own policies while he was the Chairman of the Federal Reserve system.  In the end, however, he takes another step towards the failed policies in the US that Barack Obama is pursuing.  Greenspan seems to have adopted statism, and while still occasionally correct, as often as not, he’s been tragically wrong.

His primary critique of the Euro goes back to it fundamental, underlying flaw:  The cultures of Mediterranean Europe are vastly different from those of Central and Northern Europe.  It’s much as I mentioned earlier when I described the debate I overheard among Germans in the late 1980s about the proposed European Union and a single unified currency:  Germans viewed the southern Europeans with suspicion due to a long, long history of fiscal chicanery.   Two decades have proven the point and Greenspan is now recognizing the fatal flaw those guesthouse discussions of two decades ago made plain to me at the time:  Two distinct cultures and traditions cannot share a single currency, because one culture will tend to treat the currency and their fiscal responsibilities under the union with a higher level of diligence and respect than the other. Is there really any doubt but that this lies at the heart of the European crisis?

Of course, Greenspan is not the sort of fellow who will readily admit a mistake, and what he fails to mention in this critique of Europe is the extraordinarily loose monetary policy he himself administered over at the Federal Reserve.  Frankly, between he and the hucksters of easy mortgage qualification, they together created a bubble of another sort that was likewise doomed to failure.  You cannot build or center an economy on continuing growth in a housing market that is sabotaged by bad lending practices encouraged by your monetary policy, and your fiscal and regulatory policies besides.  To see Greenspan make the one criticism without understanding his own role in the second is an irony of the most enlightening form.

In the end, however, Greenspan discusses the looming debt crisis in the US, and he seems now to be a budget hawk, but as ever, he is neutral to hostile on pro-growth fiscal policy.  He believes in manipulating monetary policy to effect economic ends, so he sees no effective problem with massive tax hikes.  This indifference, as much as anything else he said,  demonstrates the coldly calculating view of individuals as a means to statist ends, and it is here that I suspect that Greenspan really hasn’t reformed much since departing the seat of Fed Chairman.  At the end of the day, he still views your money and your life as instruments of the state, and his policy prescriptions fail to note a similar duality in cultures in our country, every bit as distinct and intractable as the differences between Northern and Southern Europe.

In our nation, the distinction isn’t formed along State borders, but at the split between urban and suburban/rural America. This also largely defines the political polarization he laments in Washington DC.  It really is that obvious.  Of course, I don’t expect Mr. Greenspan to notice this any more than he noticed the irony manifest in his criticism of the Eurozone.  I also don’t expect him ever to make a full recovery to the days when he understood the moral root of money, when he wrote many intelligent articles in his youth.  That was a long time ago, and it seems he has forgotten what he once knew.  It’s one of the few areas in which I  firmly agree with Ron Paul, although so many of his policy stances makes him unpalatable as a Presidential candidate.  Still, I’d like to remind you of what Alan Greenspan once wrote, before he began to accept the premises of the statists. First published in Ayn Rand’s “Objectivist” newsletter in 1966, and subsequently reprinted in her book, Capitalism: The Unknown Ideal, in 1967:

Gold and Economic Freedom

by Alan Greenspan

An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense — perhaps more clearly and subtly than many consistent defenders of laissez-faire — that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other.

In order to understand the source of their antagonism, it is necessary first to understand the specific role of gold in a free society.

Money is the common denominator of all economic transactions. It is that commodity which serves as a medium of exchange, is universally acceptable to all participants in an exchange economy as payment for their goods or services, and can, therefore, be used as a standard of market value and as a store of value, i.e., as a means of saving.

The existence of such a commodity is a precondition of a division of labor economy. If men did not have some commodity of objective value which was generally acceptable as money, they would have to resort to primitive barter or be forced to live on self-sufficient farms and forgo the inestimable advantages of specialization. If men had no means to store value, i.e., to save, neither long-range planning nor exchange would be possible.

What medium of exchange will be acceptable to all participants in an economy is not determined arbitrarily. First, the medium of exchange should be durable. In a primitive society of meager wealth, wheat might be sufficiently durable to serve as a medium, since all exchanges would occur only during and immediately after the harvest, leaving no value-surplus to store. But where store-of-value considerations are important, as they are in richer, more civilized societies, the medium of exchange must be a durable commodity, usually a metal. A metal is generally chosen because it is homogeneous and divisible: every unit is the same as every other and it can be blended or formed in any quantity. Precious jewels, for example, are neither homogeneous nor divisible. More important, the commodity chosen as a medium must be a luxury. Human desires for luxuries are unlimited and, therefore, luxury goods are always in demand and will always be acceptable. Wheat is a luxury in underfed civilizations, but not in a prosperous society. Cigarettes ordinarily would not serve as money, but they did in post-World War II Europe where they were considered a luxury. The term “luxury good” implies scarcity and high unit value. Having a high unit value, such a good is easily portable; for instance, an ounce of gold is worth a half-ton of pig iron.

In the early stages of a developing money economy, several media of exchange might be used, since a wide variety of commodities would fulfill the foregoing conditions. However, one of the commodities will gradually displace all others, by being more widely acceptable. Preferences on what to hold as a store of value will shift to the most widely acceptable commodity, which, in turn, will make it still more acceptable. The shift is progressive until that commodity becomes the sole medium of exchange. The use of a single medium is highly advantageous for the same reasons that a money economy is superior to a barter economy: it makes exchanges possible on an incalculably wider scale.

Whether the single medium is gold, silver, seashells, cattle, or tobacco is optional, depending on the context and development of a given economy. In fact, all have been employed, at various times, as media of exchange. Even in the present century, two major commodities, gold and silver, have been used as international media of exchange, with gold becoming the predominant one. Gold, having both artistic and functional uses and being relatively scarce, has significant advantages over all other media of exchange. Since the beginning of World War I, it has been virtually the sole international standard of exchange. If all goods and services were to be paid for in gold, large payments would be difficult to execute and this would tend to limit the extent of a society’s divisions of labor and specialization. Thus a logical extension of the creation of a medium of exchange is the development of a banking system and credit instruments (bank notes and deposits) which act as a substitute for, but are convertible into, gold.

A free banking system based on gold is able to extend credit and thus to create bank notes (currency) and deposits, according to the production requirements of the economy. Individual owners of gold are induced, by payments of interest, to deposit their gold in a bank (against which they can draw checks). But since it is rarely the case that all depositors want to withdraw all their gold at the same time, the banker need keep only a fraction of his total deposits in gold as reserves. This enables the banker to loan out more than the amount of his gold deposits (which means that he holds claims to gold rather than gold as security of his deposits). But the amount of loans which he can afford to make is not arbitrary: he has to gauge it in relation to his reserves and to the status of his investments.

When banks loan money to finance productive and profitable endeavors, the loans are paid off rapidly and bank credit continues to be generally available. But when the business ventures financed by bank credit are less profitable and slow to pay off, bankers soon find that their loans outstanding are excessive relative to their gold reserves, and they begin to curtail new lending, usually by charging higher interest rates. This tends to restrict the financing of new ventures and requires the existing borrowers to improve their profitability before they can obtain credit for further expansion. Thus, under the gold standard, a free banking system stands as the protector of an economy’s stability and balanced growth. When gold is accepted as the medium of exchange by most or all nations, an unhampered free international gold standard serves to foster a world-wide division of labor and the broadest international trade. Even though the units of exchange (the dollar, the pound, the franc, etc.) differ from country to country, when all are defined in terms of gold the economies of the different countries act as one — so long as there are no restraints on trade or on the movement of capital. Credit, interest rates, and prices tend to follow similar patterns in all countries. For example, if banks in one country extend credit too liberally, interest rates in that country will tend to fall, inducing depositors to shift their gold to higher-interest paying banks in other countries. This will immediately cause a shortage of bank reserves in the “easy money” country, inducing tighter credit standards and a return to competitively higher interest rates again.

A fully free banking system and fully consistent gold standard have not as yet been achieved. But prior to World War I, the banking system in the United States (and in most of the world) was based on gold and even though governments intervened occasionally, banking was more free than controlled. Periodically, as a result of overly rapid credit expansion, banks became loaned up to the limit of their gold reserves, interest rates rose sharply, new credit was cut off, and the economy went into a sharp, but short-lived recession. (Compared with the depressions of 1920 and 1932, the pre-World War I business declines were mild indeed.) It was limited gold reserves that stopped the unbalanced expansions of business activity, before they could develop into the post-World War I type of disaster. The readjustment periods were short and the economies quickly reestablished a sound basis to resume expansion.

But the process of cure was misdiagnosed as the disease: if shortage of bank reserves was causing a business decline — argued economic interventionists — why not find a way of supplying increased reserves to the banks so they never need be short! If banks can continue to loan money indefinitely — it was claimed — there need never be any slumps in business. And so the Federal Reserve System was organized in 1913. It consisted of twelve regional Federal Reserve banks nominally owned by private bankers, but in fact government sponsored, controlled, and supported. Credit extended by these banks is in practice (though not legally) backed by the taxing power of the federal government. Technically, we remained on the gold standard; individuals were still free to own gold, and gold continued to be used as bank reserves. But now, in addition to gold, credit extended by the Federal Reserve banks (“paper reserves”) could serve as legal tender to pay depositors.

When business in the United States underwent a mild contraction in 1927, the Federal Reserve created more paper reserves in the hope of forestalling any possible bank reserve shortage. More disastrous, however, was the Federal Reserve’s attempt to assist Great Britain who had been losing gold to us because the Bank of England refused to allow interest rates to rise when market forces dictated (it was politically unpalatable). The reasoning of the authorities involved was as follows: if the Federal Reserve pumped excessive paper reserves into American banks, interest rates in the United States would fall to a level comparable with those in Great Britain; this would act to stop Britain’s gold loss and avoid the political embarrassment of having to raise interest rates. The “Fed” succeeded; it stopped the gold loss, but it nearly destroyed the economies of the world, in the process. The excess credit which the Fed pumped into the economy spilled over into the stock market, triggering a fantastic speculative boom. Belatedly, Federal Reserve officials attempted to sop up the excess reserves and finally succeeded in braking the boom. But it was too late: by 1929 the speculative imbalances had become so overwhelming that the attempt precipitated a sharp retrenching and a consequent demoralizing of business confidence. As a result, the American economy collapsed. Great Britain fared even worse, and rather than absorb the full consequences of her previous folly, she abandoned the gold standard completely in 1931, tearing asunder what remained of the fabric of confidence and inducing a world-wide series of bank failures. The world economies plunged into the Great Depression of the 1930’s.

With a logic reminiscent of a generation earlier, statists argued that the gold standard was largely to blame for the credit debacle which led to the Great Depression. If the gold standard had not existed, they argued, Britain’s abandonment of gold payments in 1931 would not have caused the failure of banks all over the world. (The irony was that since 1913, we had been, not on a gold standard, but on what may be termed “a mixed gold standard”; yet it is gold that took the blame.) But the opposition to the gold standard in any form — from a growing number of welfare-state advocates — was prompted by a much subtler insight: the realization that the gold standard is incompatible with chronic deficit spending (the hallmark of the welfare state). Stripped of its academic jargon, the welfare state is nothing more than a mechanism by which governments confiscate the wealth of the productive members of a society to support a wide variety of welfare schemes. A substantial part of the confiscation is effected by taxation. But the welfare statists were quick to recognize that if they wished to retain political power, the amount of taxation had to be limited and they had to resort to programs of massive deficit spending, i.e., they had to borrow money, by issuing government bonds, to finance welfare expenditures on a large scale.

Under a gold standard, the amount of credit that an economy can support is determined by the economy’s tangible assets, since every credit instrument is ultimately a claim on some tangible asset. But government bonds are not backed by tangible wealth, only by the government’s promise to pay out of future tax revenues, and cannot easily be absorbed by the financial markets. A large volume of new government bonds can be sold to the public only at progressively higher interest rates. Thus, government deficit spending under a gold standard is severely limited. The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit. They have created paper reserves in the form of government bonds which — through a complex series of steps — the banks accept in place of tangible assets and treat as if they were an actual deposit, i.e., as the equivalent of what was formerly a deposit of gold. The holder of a government bond or of a bank deposit created by paper reserves believes that he has a valid claim on a real asset. But the fact is that there are now more claims outstanding than real assets. The law of supply and demand is not to be conned. As the supply of money (of claims) increases relative to the supply of tangible assets in the economy, prices must eventually rise. Thus the earnings saved by the productive members of the society lose value in terms of goods. When the economy’s books are finally balanced, one finds that this loss in value represents the goods purchased by the government for welfare or other purposes with the money proceeds of the government bonds financed by bank credit expansion.

In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.

This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.

Yes, once upon a time, Greenspan was a sensible man who found the statists detestable. Somewhere, he lost his way, and I wish he would remember his earlier positions that had been far more logical.

Greece Seeing Runs on Banks – Escalating

Tuesday, October 25th, 2011

Making a Withdrawal - Of Everything

We’re seeing the beginning of the end for Greece.  The runs on banks area escalating even now.  People are beginning to panic as they realize their life savings are at risk, and they’re withdrawing the money so they can stuff their mattresses.  The problem is, hyper-inflation, which may be just around the corner, will turn their mattresses full of paper into worthless kindling.  There’s no point in pretending otherwise, as the Greeks have looted their own government and monetary system to the extent that it’s probably unrecoverable.  Greece is going down. Back in the 1980’s, as I listened to the first debates about the formation of the EU, I listened to opponents.

They worried that they were getting suckered into a bottomless pit of debt with the Mediterranean countries, that were well-known for their fiscal and monetary unreliability.   I feel badly for Europe, but guess what?  Our Federal Reserve and the International Monetary Fund have managed to link us to the same fate. Here are some tidbits from Bild via ForexCrunch:

“I come here to immediately pick up my pension € 300. Who knows what else happened today. My money is safe only when it is at home” said Pensioners Evagelos Dimitros age 73.

The head of an Athens bank branch told BILD: “More and more Greeks who still have some money come to get it from the bank. In my office there are a total of 5,000 customers, 2,500 of which either have their money transferred abroad or hoard it at home. If this continues, there will soon be no more money.”

This is a warning and an alarm bell ringing for all of Europe.  This is the beginning of the collapse of the European single currency, whether they realize it or not.  The British should jump ship from the EU Titanic if they wish to save themselves.  The Germans may be left holding the bag, and Italy is on the verge of following suit immediately.

Ladies and gentlemen, through a string of bad decisions, and suicidal policies that have promoted the growth of socialism, we have a true calamity coming.  Even now, as the  European heads of state meet to discuss what to do next, it seems they will fail to avert this crisis. Of course they will.  There’s no way around it.  Neither big government, nor even big, big, big government can fix this in any way but one: Slash spending.  Until the member governments are willing to do that, there’s no hope.

“All Restaurants Are Taco Bell”

Saturday, October 22nd, 2011
What Kind of Monopoly?

Drudge is linking the story about Google considering joining in on a bid for Yahoo.  Some are already beginning to raise a flag about monopoly, as the two Internet giants certainly occupy some of the same market space.  Of course, they might be interested in acquiring it just to slice it up and sell it off, or it could be that like so many things, Google has gotten so large that it wants multiple big-name brands to capture more of the market.  Either way, it’s not necessarily a monopolistic move, but many will already see it as such.  Part of the thing that makes a monopoly is government authority.  You may remember the silly, poorly-made movie starring Sylvester Stallone titled “Demolition Man,” in which the recently defrosted hero discovers that “all restaurants are Taco Bell.”  This was something enforced on the culture by government.  That is a coercive monopoly, which is the only sort that should cause you concern.

One of the problems is that people don’t understand the concept of monopoly, because what the popular culture tells them is that all monopolies are bad. Far be it from me to defend Google here, or in any instance, but I think it’s important that we understand what truly constitutes a coercive monopoly, as well as understanding how the concept has been oversimplified into the more generic and misleading term “monopoly.”

A monopoly is said to exist when a specific person or enterprise is the only supplier of a particular commodity.  For instance, if you patent a new device, and have sole rights to produce or license the production of the device, you have a monopoly.  If you own the last ham sandwich on Earth, with no expectation of there ever being more, you have a monopoly.  Look down at your keyboard. If you own it,  you have a monopoly on its use.  In this very obvious sense, a monopoly isn’t necessarily bad at all.  Copyrights are another form of monopoly, as are trademarks.  We could not long function as a society if there was no concept of property and no attendant “monopoly rights” of ownership.  As you can see, the concept is an important a vital part of a capitalist society.

Now let us turn to the much more specific and problematic concept of coercive monopolies.   This form of monopoly is a good deal different, and it’s the sort of which we should generally disapprove. Like patents, trademarks, and copyrights, coercive monopolies are granted and enforced by government, however, with these, there is nothing to prohibit another person from providing a substitute product or service.  When government creates a legal coercive monopoly, it freezes out substitutions, and it reduces the provider of the goods or services to one entity.  Consider the municipality that provides a public water utility, but prohibits the drilling of water wells.  Consider the public garbage collection service, while the city that provides it prohibits the use of alternative collection services, or requires that you pay the fees irrespective of your usage of the service.

Think of the public school system that collects your money, in most places based on the value of your property, whether you have children or not, and without rebate if you send your children to a private school at your own expense.  Notice that in this case, they are able to extort the money from you on the basis of seizing your property.  These are the sorts of monopolies with which governments empower themselves, but they also empower others as well.

Consider Major League Baseball, that gets a specific exemption from the anti-trust statutes under the law.  You can’t simply go set up your own baseball league.  This institution is protected by exemption from anti-trust laws, in specific legislation by Congress, under the assumption that it’s somehow too fundamental to American culture to permit competition.  Let me suggest that the idiotic legislators who passed this exemption failed to recognize something much more fundamental to American society: Competition.  The irony of protecting a competitive sport from external competition is mind-boggling.  If you’re a pro quality baseball player, you can either accept their rules or give up your career. This has been done in the main to restrict players from being able to negotiate.  If there was another league paying better, or willing to allow the player to decide the cities with which he would negotiate, the value of baseball players would escalate.  Some people think they’re paid too much already, but the fact is that they should earn whatever they can negotiate that the market will bear.

Of course, there are other sorts of monopolies that government rigs all the time.  Back in the 1990s, Bill Clinton put a huge swath of territory in Utah off-limits to coal mining, allegedly on the basis that it was to protect the environment.  It was also one of the only known sources of clean-burning coal in the world, the other being offshore.  Guess who had been buttering Mr. Clinton’s bread?  Yes, this sort of game is played all the time in Washington, where effective monopolies are created by legislation, and it’s part of the entire universe of crony capitalism that so many have been lamenting recently.

The government has enacted anti-trust laws advertised as being used to break up monopolies, or to prevent their formation, but all too frequently, this is just an excuse for intervention in the markets used to extort money from companies.  The most egregious cases of this are when government imagines a monopoly into existence so that they can squeeze money out of them.  Consider the case of Microsoft, that in the early 1990s became the dominant player in desktop operating systems.  At the time, Microsoft didn’t have a massive lobbying operation, and Bill Gates ran his company, but once he started to really beat his competitors badly, his competitors cried foul and turned to government for relief.  The problem is that Microsoft wasn’t really doing anything illegal, despite all the posturing by its competitors, and such laws as could be stretched to cover its actions were miserable ideas born of crony capitalism.

Several companies, all competitors, went to politicians and lobbied them to take steps against Microsoft.  It was a bi-partisan lynching, and after the affair, I believe it signaled the beginning of Microsoft’s market-share decline.  Bill Gates learned from the experience, as did his successor, and you can believe that Microsoft now employs plenty of lobbyists to plead its case before government. Did consumers benefit?  No.  So who did?  It didn’t save Netscape, which had been one of the complainers, and the truth is that Microsoft’s market share had been the product of great marketing, a very good product, and good, old-fashioned competition.  In the main, it had been what is termed a “natural monopoly.”   People simply preferred their products.  In the end, the only beneficiaries of this fiasco had been government and its officials, its regulators, and of course, all the lobbyists who now rake in cash.

When somebody complains to you about the monopoly some company allegedly enjoys, you’d be right to consider just what it is that the term means in the context proposed.  Not all monopolies are bad, and some are even vital parts of our economic system, but the ones with which we ought to be most concerned are those created in the cloakrooms in Congress, in the old executive Office building, and in the White House.  It never fails to be the case that it is this sort that subjects us all to the greatest perils.

The Durbin-Obama Debit Card Fee

Tuesday, October 4th, 2011

They "Care" About You

It’s time we come recognize the people who are making a difference in our lives.    In this case, it’s a negative difference, and while the banks are going to get blamed, the idea here is to give credit (or place blame) where it is due.  Dick Durbin, D-Ill., helped to create the circumstance by which new Debit fees will be necessitated by banks to pay a new tax assessed against them under the Dodd-Frank Financial reform act.  You should feel much better knowing that as consumers, you’re being “protected” by the machinations of big government.  Of course, that the demagoguery they used to sell all of this, but now the sad truth is out:  You’re going to pay more for the pleasure of access to your own money.  Don’t complain.  Thank Dodd, Durbin, Frank, and Obama.

Durbin’s Amendment to the bill was the cause.  You’ve heard about Bank of America tacking on a $5/month fee to account-holders for debit card use?  They won’t be alone, but it’s not because of pure profit-seeking whimsy.  It’s the result of Dick Durbin, Christ Dodd, Barney Frank, and anybody who voted for the Financial Reform Act.  Barack Obama signed it into law.  Now, you need to understand that all of this is simply because they care about you, and wish to punish the “greedy bankers,” which is a notion that appeals to the absurd goons now protesting on Wall Street.

Be happy!  This is your government at work.  This is the change you hoped for, isn’t it?  No?  Ladies and gentlemen, this is an example of the whole problem with big government employed by demagogues who are simply making an appeal to dolts on the basis of class envy.  This is the sick heart of the ideology of statism.  People will blame Bank of America, but the truth is that this was done to you by the Democrats pictured above, along with a larger number not pictured in Congress who inflicted this upon you.  Durbin actually had the nerve to urge people to dump the Bank of America.

Whenever we see politicians behave in this way, we should grab our wallets.  There’s seldom a time when the costs they inflict on business won’t ultimately fall to us to pay.  That’s a lesson all of the protesters on Wall Street and elsewhere ought to understand.

Sarah Palin Posts New Note on Obama Crony-Capitalism

Wednesday, September 14th, 2011

Sarah Palin on Facebook

In a scathing criticism of the scandalous usage of taxpayer dollars in what has all the appearances of a slimy pay-to-play shell-game, Sarah Palin takes on the Obama administration and the potential wrong-doing in the Solyndra Scandal.  Not satisfied with just calling out Solyndra, Governor Palin also talks extensively about GE’s relation to the Obama administration.

As this site has reported previously, the giant sham of Solyndra is now exploding onto the pages of major media in a scandal that is threatening to overturn the entire apple-cart of DC crony capitalism as expressed in the current administration, and hopefully beyond.

As usual, when confronting this sort of apparent corruption in government, Governor Palin is on the front lines on behalf of the American people.  Among other things, she offers:

“President Obama has his sights set on raising $1 billion for his reelection campaign. Raising that money won’t be easy. But if you can hand out other people’s money to friends, it must get a whole lot easier. This crony capitalism and government waste is at the heart of our economic problems. It will destroy us if we don’t root it out. It’s not just a Democrat problem or a Republican problem. It’s a problem of our permanent political class.”

Amen! Our country cannot withstand much more of this, irrespective the party responsible.  Kudos to Sarah Palin for once again telling it like it is.

Barack Obama’s “Hail Mary” Pass

Thursday, September 8th, 2011

Head-Fake Right, Ball Goes Left

It’s a close game, and with time ticking off the clock, the home team is on defense.  The other team has possession of the ball, and they run it out of bounds to stop the clock.  They have one more chance to run a play, but with 80 yards of the field between them and the end-zone, the quarterback steps into the huddle with instructions from the coach for one last “Hail Mary” play.  Unfortunately, the ball is mishandled on the snap, and the while the quarterback picks it right back up, he’s already killed the initiative.  His receivers are trying to get open with every head-fake known to man, but the defense is on it, and the ball is in the air, and just shy of the 20 yard-line, the ball is picked-off by a quick corner-back.

Off to the races, and down the sideline he goes, unopposed for a stand-up touchdown.  He could have ducked out of bounds at any time and ended the game, but he wanted to deliver a message:  “I’ve seen this play before, and it will never work again.” The losing quarterback looks on in horror, knowing he’s lost the game, but the corner-back isn’t finished, and in an act of celebratory sportsmanship, Mark America spikes the ball.  Mr. Obama, you’re a terrible quarterback and only the ineptitude of our own offense has kept you in this game this long.

Does he really believe we will fall for this, or is this simply aimed at the unthinking folks who get their news in three-second sound-bites from MSNBC?  President Obama presented a number of fine-sounding capitalistic ideals, intermixed with the pure statism, but the truth is that he squandered all his initiative when he mentioned the manner in which it would be paid.  Take all the fine head-fakes out of this speech, and what you are left with is really just more of the same. The new stimulus, which they won’t call stimulus, is to be paid for by adding to the deficit-deficit Congress is already likely unable to address later this year.  As I said, it was a head-fake to fiscal responsibility, but that of which it really consists is more smoke and mirrors, and more can-kicking that doesn’t advance the ball down the field, and will ultimately only add to our disaster.

There were a number of relative novelties in the speech, also part of the head-fake, referencing the pledge of allegiance as he did without dropping “under God.”  What wasn’t novel was his continued reliance on the hand-outs to the education establishment and the unions.  This is the most thinly disguised program of alleged economic stimulus on record.  One might ask why he keeps going back to the same play-book, and the answer is simple: He’s got nothing else.  Ideologically, he’s simply incapable of rejecting more statism, although this time he wrapped it all up in red, white and blue bunting.

There can be no escape from reality, and yet what Barack Obama offered today was a farce.  He threw in a few temporary measures such as tax credits for business, and more short-run tax cuts for individual tax-payers, but he insists on raising taxes on the wealthy.  He insists on paying for this with imaginary cuts added to other imaginary cuts, but there’s no honest proposal here.  What Mr. Obama has accomplished would be everything he set out to do, if it weren’t for that one corner-back who intercepted his big lie.  Now truth be told, if you watched his speech, you noticed the same things, but many of your friends and family won’t have been watching since this President is a ratings disaster almost equal to the economic one that he represents.

This speech was pure political theater, which is why Boehner should have refused it when first proposed, or he should have offered the President the 2am pacific time slot for this load of continually stinking refuse.  Sadly, the Republican leadership hasn’t been good at office, and is much happier when on defense since others like you and me will carry their water.

It’s a farce to suggest that we can stimulate the economy with temporary tax cuts and more spending programs all paid for by increased taxes on the rich and more magical, imaginary cuts we all know we will never, ever see.  This was propaganda for the sound-bite news gatherers, in order to help ratchet up his own base.  If Speaker Boehner had any kind of fortitude, he’d stand up and tell the President:  Not good enough.  DOA.  We will see how the Republicans react to this nonsense, but I have fears about their willingness to stand once the “killing babies, killing seniors, and killing jobs” rant begins.

They’ve been timid and terrified at every turn.  The only good news to come out of this is that it was likely seen in not many more households than watches MSNBC.  We’ve had enough of this propaganda, and at this late hour, we need to send in a back-up. We need to fire the coach.  I can see November 2012 from my house.  Can you?

Sarah Palin Knows How to Destroy Crony Capitalism

Tuesday, September 6th, 2011

Sarah Palin Takes on the Crooks!

One of the problems our nation faces at this moment of economic crisis is that all too frequently, the best answer to a problem is ignored, the best person for a job doesn’t get it, and the best path forward isn’t followed.  This leads to a faulty conclusion among far too many Americans about the virtues of capitalism:   They don’t see any.  Lost in the shuffle of bureaucratic paperwork, and wrapped in a pile of red tape, and hidden from sight by nifty euphemisms, the American people are not suffering from too much capitalism, but as Governor Palin understands, too little of it unobstructed, and unadulterated by crony capitalism.   Many people are confused about the difference, even unaware that the increasingly dominant system really isn’t capitalism at all.  Few Americans have known real capitalism, because for generations, politicians have been stealing their economic and political rights.  It’s time we clear up the meaning of all of this, and consider what is capitalism, as distinct from the shoddy representations of it we’re provided by the entrenched permanent political class inside the DC beltway.  Sarah Palin understands why crony capitalism must die, but now in order to save this country, so must you.

Capitalism is an economic system that relies upon individual choices and freedom, not merely in the economic sphere, but in all facets of life.  To succeed, Capitalism requires that individual men and women are free to make choices on what to produce, when to produce it, how to produce it, and whether to produce it at all.  It also requires the free choice of those who will purchase, whether goods or services, without the intervention of people and institutions who seek to rig the market to their advantage.  The moment you begin rigging the market to support somebody’s idea of a preferred outcome, you begin to destroy Capitalism.  Like any economic system, Capitalism relies on certain rules too.  There must be a presumption of rights to one’s property and one’s wealth, and there must be stability in the rules.  Fraud and theft must be punished, disputes must be resolved against an objective standard of law, and the security of the nation must be preserved in such a way to avoid intruding unnecessarily into the market or the freedoms of citizens.  What must be happen in all cases is that those with the power to legislate, regulate, or interpret those rules may never be permitted to use those rules to exact their own subjectively defined preferential results.

In the same way that actual, objective justice is displaced by subjective notions of justice, like social justice, racial justice, economic justice, and more recently, environmental justice, so too is real Capitalism displaced by the predations of its shoddy imitator: Crony capitalism.  When you hear a social activist claim to pursue “social justice,” what they’re hoping to do without you having noticed is to substitute a fake, and completely contrary idea for what is actual justice.  In our legend and lore, Lady Justice stands blind-folded, scales in one hand, and a sword at the ready in the other.  She judges the matter based on an objective rule of law.  What “social justice” or other modified forms offer is to set aside the objective form of justice in the name of the subjectively derived ends in question.  One notion of social justice is that all people ought to have sufficient food to eat, but it requires that some people have food(or the money to buy it) stripped from them  to feed others.  Justice would weigh the matter and answer that the property rights of one individual do not exist at the discretion of others, but the notion of “Social justice” demands a scrapping of the objective standard.  In much the same way, all of the other perversions of justice seek precisely the same end:  To strip some people of their rights and liberties in order to give preferential treatment and wealth to others.  These notions displace and destroy actual justice.

For these same reasons, crony capitalism destroys the real thing.  In a real capitalist system, the market and consumers would evaluate a product or company and decide whether to purchase it based on considerations that are entirely a matter of personal choice.  If you have a large family, for instance, you might wish to purchase a larger vehicle, such as a min-van or an SUV.  The only deterrents to this choice the market would impose is that these get poorer gas mileage and cost more to purchase and maintain.  If your family necessity dictated it, however, you would purchase the vehicle you need and consider it as a cost of the family you’ve chosen to raise.  If government steps in to make that choice more difficult, or to make it altogether impossible by regulating large vehicles out of existence, what you are seeing is one application of social engineering, and in most cases, also a healthy dose of crony capitalism.

Somewhere, behind the scenes, somebody’s palms have been greased in one or more ways, from one or more sources, all aimed at deriving a particular outcome in the marketplace: Fewer mini-vans and SUVs.  Environmental groups will seek such ends, but so too will manufacturers of smaller and lighter vehicles.  In both cases, there will be some politician(s) somewhere deriving a benefit from the legislation, in one or more forms.  One is in the direct cashing in through investments and the manipulation of the markets, and another is through contributions to election campaigns.  For nearly every piece of legislation or regulation to come out of Washington, there is very likely to be one or more such stories on the back side that make clear that Capitalism is being discarded in favor of some particular corporation, group, or individual.  This process dominates the legislative process, and it happens at all levels of government, but in no other place is it so rigorously practiced and thoroughly entrenched as in the federal establishment in Washington DC.

Many people will wonder what kind of difference this issue really makes in their lives.  The truth that is concealed beneath the surface is an ugly mess of corrupt politicians, entrenched interests, and insider trading and deal making that defies summation, not because it’s hard to demonstrate, but because the whole fabric of Washington politics is awash in it.  It’s become the infinite web of lies and deceit that stands guard over an establishment preying upon the people it alleges to serve.

Consider the health-care debate.  How many pharmaceutical companies had a hand in crafting the legislation?  In 1993, when Hillary Clinton was working the health-care issue, she was stopped in part by the fact that the pharmaceutical industry opposed her plans which ignored their property rights and the actual needs of the market.  This time around, with the passage of the Affordable Care Act, commonly known as Obamacare, the industry was bought off by granting to them large giveaways and concessions.  The politicians purchased silence this time.  In exchange for their silence, the legislation was crafted to aid them and better insure their future, or so they were led to believe. Also in exchange will be the political contributions yet to come.

You might think this is awful, but what institution has the ability to shut up large corporations, by some form of extortion or bribery?  With legislative and regulatory powers that have exceeded all previous bounds, no business can survive an all-out assault by the US Federal Government.  There isn’t a soul alive who can out-gun the US Government if Congress and/or the President decide to make you their target.  It’s also true that nobody can make you richer, faster.  All you need to do is set up a company to pursue some goal like green energy, and they will throw federal dollars your way in the form of both direct and indirect subsidies.  A company can modify an existing product line to comply with the news standards, but all too frequently, without a political contribution, it will make no difference to the regulators.  Direct subsidies will come in the form of grants and various tax loopholes, and indirect subsidies will come in the form of tax incentives to those who will buy the target product or service.  That’s a pretty lucrative process if you can get in, and the politicians in Washington dispense your money in exchange for some cash in the contributions basket.

If you think that’s not bad enough, ask yourself what interest government would have in creating standards for who can work in the computer networking field.  Yes, even here, it’s a kickback to somebody.  Any time you see a government at any level requiring permits, certifications, or licenses to work in a particular field, you would do well to ignore their stated motives and instead follow the money.  If you want to control a thing, all you need to do is control the people who build, own, operate, and maintain it.  In this case, it’s aimed at the people with the skill-set, and it will undoubtedly lead to a greater unionization of the field that will in turn lead to higher wages in the short run, but lower productivity in the longer run.  So, who is paying whom? Once again, you will find that unions are behind this, having become a sort of corporate interest of their own, using the power of government to freeze out competitors, all on the basis that they will deliver loot and votes to politicians.

Those of you who think Republicans are or have been immune to all of this need to examine the question more closely.  One can find Republicans and Democrats using these same practices.  Democrats pretend to be the friend of the working man, denying any such connections, and Republicans use the notion that they’re business-friendly.  I’m business-friendly: I continue to reward companies that provide me the best products and services, in part by way of repeat business or word of mouth advertising on their behalf.  What some who claim to be conservative capitalists have done is to actually climb into bed with corporations for kickbacks and contributions.  That’s not “business-friendly,” but instead mere crony capitalism.

When Sarah Palin criticizes crony capitalism, it’s because she has a long and well-established track record of opposing it while serving in offices from the Mayor of Wasilla all the way to the office of Governor.  If you haven’t seen the movie, The Undefeated, it’s now out on Pay-Per-View and you can learn about her struggle against Alaska’s version of the same dirty practices.  Sarah Palin understands that there’s no way to make deals with the devil without becoming his tool, whether you’re the corporation turning to Washington’s interest, or a politician serving a corporate interest.  This is because crony capitalism seeks to avoid the normal rewards and punishments of the free market, and in the end, destroys real capitalism. What Sarah Palin offers is the opportunity to wipe this mess away, to clean up Washington, and to turn tables on the corruption within.  One of her bold proposals this Saturday offers a glimpse of the ideas for which she will fight.

We’ve all been taught about the American inventors, innovators and entrepreneurs who started with a better idea, and built empires of industry, providing jobs and wealth to the whole economy as a result.   What few of us realize is that all of this can be negated by the corruption of crony capitalism.  We’ve all seen the mom-and-pop stores die off, not for inefficiencies in all cases, but frequently because corporate giants have been legislated or regulated market power they hadn’t gained by right of their performance in the free market.  Government shouldn’t be so business-friendly that it takes the side of one business or industry over another, but all too frequently, this is what happens when politicians sell their souls to the highest bidders in exchange for maintaining their power.  Republican Independent, or Democrat, we all deserve better.  Sarah Palin understands this, and it’s why she’s fighting to clean up this mess.  She knows there can be no lasting virtue in capitalism unless we remove its corrupt imitator.  You can bet all the crony capitalists inside the beltway understand that she knows it, too.

Palin Confronts Big Government

Saturday, September 3rd, 2011

Taking on the Establishment

Indianola, IA- Delivering the keynote address to the Tea Party of America’s Restoring America event on Saturday, to a rain-soaked audience, Sarah Palin offered a stunning rebuke of crony capitalism, and offered a prescription to address this while also stimulating the economy:  Eliminate all corporate income taxes, but also eliminate all so-called “corporate welfare” and other subsidies and bail-outs aimed at protecting some businesses at the expense of every other.  This proposal represents a sweeping reversal of the current prescriptions in Washington DC.  More, by eliminating the corporate hand-outs, it threatens the establishment and there will be strong opposition, starting at the White House, but certainly reaching to every lobbying firm and congressional office on Capitol Hill.

Given the tenor of her address, the crowd was enthusiastic, interrupting her with chant of “Run Sarah, Run!” Nevertheless, Mrs. Palin offered a serious policy proposal that deserves equally serious consideration.  What this proposal offers is a way back from the depths of our current economic plight by encouraging investment in productive capacity in the US, freeing up capital currently frozen overseas because to return it to the US would subject it to an exorbitant rate of taxation.  At the same time, it would place all corporations on even footing, providing no favors for one corporation over the other.  In short, the government would be taken out of the business of picking corporate winners and losers to a larger extent.

This does more than merely reduce the size of government and stimulate economic growth.  It strips powers from politicians who use subsidies and hand-outs to corporations as a tool to raise funds for their own political entrenchment.   That may be the most important reason why the establishment will oppose this idea.  This begins a path to reducing not only the cost and scope of government, but also limiting the power of politicians.   The left will naturally oppose this, and they will certainly seek to paint the tax relief provided as a boon to corporations, but the truth is that the left will attempt to conceal their relations to the corporate cronyism that pervades Washington.  More, they will try to hide the fact that what is really under assault in this proposal is an oligopoly among the legislative insiders, both Republicans and Democrats, that will remove one of the most popular tools for steering corporations while appearing to be hands-off, or worse, in the public interest, all while enriching themselves in one form or another.

This is a solid proposal for government reform and economic stimulation that would immediately provide gains in the general economy.  It deserves serious consideration, but given the President and Congress now in power, that’s not likely. Real change will begin in 2012 when we are able to choose leaders who understand that the economic crisis we face is not the result of capitalism, but of the continuing perversions of it by those in Washington.

This Is a “No-Crony-Capitalists-Zone”

Saturday, August 27th, 2011

One Has a Drawl

I believe that capitialism is the only economic system under which a free people can thrive. I don’t believe in “too big to fail,” and bail-outs, hand-outs, or other subsidies for anybody.   Have I been clear enough?  I believe in the form of capitalism best expressed in the writings of author Ayn Rand.  For those of you familiar with the book Atlas Shrugged, I would like to remind you of three characters you ought to consider when deciding who to nominate as the GOP’s candidate for President in 2012.   Those characters are Orren Boyle James Taggart and Wesley Mouch.  If you’re not familiar with the book, I’ll try to help you along.  These three are important characters because they define the problem we have with the establishment Republican Party in Washington, DC, and elsewhere.  By understanding the flaws of these characters, it may help to understand what is wrong with the current front-runners in the Republican primary race.

Orren Boyle fancied himself a steel magnate, but he was not interested in competition.  He wanted controls placed on his competition that would favor his interests, investments, and incompetence.  Boyle was one of those captains of industry who prefers to make social statements than to produce goods for the market, so the quality and production output of his steel mills showed it.  Reduced to the state of a scavenger by his incompetence in his own industry, Boyle came to rely upon government to boost his sales and fill his coffers via regulations on his competitor.

James Taggart was the President of Taggart Transcontinental Railroads, and his connections to Washington were his main source of power.  His sister, Dagny, was actually responsible for keeping the company afloat, because James had never troubled himself to learn from his father what makes a railroad go.  James fancied himself a cultured man, and enjoyed using his political connections to destroy his competitors.  He had no competency for business, and instead spent his time plotting how to ruin his own sister even if it meant destroying the railroad over which he presided.  Not satisfied to ruin businesses, he also took a bride in order to destroy her.

Wesley Mouch began as a lobbyist for Orren Boyle’s main competitor, Hank Rearden, and while Rearden didn’t know much about what his lobbyist was doing for him, everybody told Rearden he needed a lobbyist to defend his interests in Washington.  Mouch double-crossed Rearden and set him up, eventually becoming the chief adviser to the President on economic matters, and essentially the economic dictator of the country.  Wesley Mouch was the perfect government man, using the power of government and law to extract money from people and businesses to the detriment of a few wealthy interests, particularly Orren Boyle and James Taggart. He also used his power to destroy his former employer’s business.

Now that you have some familiarity with these three characters, let me explain to you that they were all quite obviously villains.  They exhibited all the traits of the crony capitalism I despise, and believe you ought to also.  It should be noted that among the various people now entered in the race for the GOP nomination, nearly all of them have these sorts of skeletons in their closet.

Mitt Romney is a fake capitalist.  There’s really nothing more to say about it than that.  The moment you consider his Romneycare law in Massachusetts, there’s really damn little else to say.  A government, at any level, that mandates you buy a product or service, for any purpose whatever is a tyrannical fascist machine.  As an actual capitalist, I know that such mandates serve only four purposes:

  • To enrich politicians via lobbying and political contributions
  • To establish and maintain a captive market
  • To drive up costs for every customer, on average
  • To enable politicians to disclaim future responsibility with a claim of “It couldn’t be helped…” when things go wrong

That’s it. That’s all there really is, and it’s all you should need to know to understand why Mitt Romney is wrong for America.

Rick Perry has many of the same attributes, as I’ve covered at length in other posts. There are those who do not like my willingness to point out these problems with Rick Perry’s actual record, but I won’t retreat.  His record is one of repeated dips into the barrel of crony capitalism if we inspect only two notorious issues: The TransTexas Corridor and the Gardasil flap. There are many, many more.

You’re free to tell me you’ll support him anyway, but you’re not free to pretend his record has been anything but filled with such instances.  You lose all credibility to suggest otherwise, and you can bet that just as I am pointing it out now, the Democrats in 2012 will shove it down his throat(and yours) with glee.  Rick Perry has been a government guy almost the entirety of his adult life, trading favors and peddling pull all along the way.

You can pretend to yourself that Mitt Romney and Rick Perry aren’t really modern day, real life versions of Wesley Mouch, but you’re only pretending, and the only person you’re likely to fool with all this is you.  If you’re happy with this sort of fake capitalism, and aren’t worried about its implications, and if it doesn’t bother you enough to reject either of these, how can you be upset by Obama’s use of similar tactics?  Jeffrey Immelt? (Orren Boyle?)  George Soros? (James Taggart?)  If you can look at these things when done by Barack Obama and consider them a travesty, why can’t you see the timber in your own eye?

My conservative friends, I’d ask you to consider that rather than worrying about “who can win,” or other such nonsense at this early stage, you should instead take great care to vet your own candidates based on their records.  If you put up a nominee who is compromised by the same ethical troubles, and therefore indistinct from Obama, how do you intend to defeat him?  Will you suggest to me that you’d be happy to have somebody to run who can pretend not to be a statist?  Will you offer to me that this is good enough because Obama must go at any cost?  Any cost?  What about the cost of your intellectual integrity? Your soul?  Your sense of right and wrong?

Ladies and gentlemen, I stand prepared to vote for any plausibly capitalist candidate who is not part of the problem we’re already experiencing so bitterly and thoroughly. Neither of these fit that criteria.   The country cannot be saved by Wesley Mouch.  You’d better learn to identify the fakes in your midst, and your time is running out.

A First Step to Restoring our Economy: Drill Baby, Drill!

Thursday, August 18th, 2011

The Energy President?

It’s a sad fact:  For each dime the price of fuels rises above $2, more jobs are lost.  There’s no way to escape reality.  Our economy depends upon growth – all life does, and growth requires energy, but as energy becomes more costly, the less growth you will necessarily see.  We have other issues too, but with each day that Obama sits at the helm, our ship of state wanders farther off course.  We need a steady hand at the wheel, one who knows about energy production, and how to create the conditions in which energy production is boosted, and not hampered by regulations.  That leader also needs to hold energy giants’ feet to the fire, preventing them from squatting endlessly on resources the market demands.  There is only one potential candidate in the country who has done this.

Don’t let the propagandists lead you astray: What’s doing more to keep our economy in decline and hamper growth or recovery is the big government regulations and myriad obstacles Obama has placed in its way.  If you want to make a substantial change, you’re going to need to strip from him the power to obstruct you, and put in his place a President who understands the critical importance of energy to our economy.  We need an “Energy President”, and that can only be Sarah Palin.

It’s really very simple.  Every dollar diverted to the cost of energy is a dollar that cannot go for other things.  You cannot upgrade your machines, hire more employees, or buy as many raw materials if a larger proportion of your expenses is taken up by energy costs.  Any sensible examination of the economy of the United States immediately demonstrates the foolhardy nature of an economic policy and a regulatory regime that promises to drive the prices of energy up, while simultaneously driving down the value of our currency.  Either one would be be a disaster on its own, but the two in combination sends devastating effects through the entire economy to create a spiral of cannibalistic decline which is nearly impossible to arrest.  This is the simple fact.

Like most instances of cause and effect in macroeconomics, there is always a lag between the two.  Fuel prices sky-rocketing today will depress economic growth in the statistics that will be tabulated in three to six months.  When fuel prices decline, the lag of the effect in response to this cause means economic growth will be well behind, but it will respond favorably to energy prices.   So you want proof?   I’ve gone out and found the first graph for each measure I could find to cover the period of the last 6 years.  They come from different sources, different sites, but I’d like you to look closely. First, let’s look at the prices of gasoline:

Fuel Prices

(H/T for the graph)

Next, let’s take a look at the US Gross Domestic Product’s growth(or decline) in the same period:

United States GDP

(H/T for the chart)

As you can clearly observe, there’s a clear lag, but the tepid growth we began to experience beginning in second half of 2009 tracks well with the lower fuel prices under which the economy had been operating for roughly six to eight months. At the same time, the bottom of the GDP numbers in Janurary 2009 tracks well with the peak in fuel prices in the summer of 2008. If for some reason, you view these graphs and remain unconvinced, notice later in the same charts that while the trend is a little less clear, the results are the same. Fuel prices began a steep climb in February of 2011, and now, six months later, look what has happened to GDP growth. (Note, the 2nd quarter numbers represented in this GDP chart do no show the revised GDP numbers, as that last bar should be half as high above the line as this chart reflects.)

So what can you make of all of this? Simply put, there is no escaping the fact that the rational among us have always known: Our economic future is directly tied to the relative cost of energy. None of this should surprise anybody reading this site, but the colossal ignorance among those on the other side of the argument is shocking. We cannot resume economic growth until we have a president who is not a servant to leftist causes, particularly environmental radicals, who wish to constrain economic growth by making it too expensive to operate.

This is the meaning of Obama’s campaign promise:

“Under my plan of a cap and trade system, electricity rates would necessarily skyrocket.”

In other words, he knew this would be the effect, but he damned-well did it anyway. People wonder why Rush Limbaugh wanted Obama to fail? Ladies and gentlemen, we should have been so fortunate, but sadly, we’ve not been lucky and Obama’s plan has succeeded, and it’s reflected in the anemic growth we’ve experienced since his policies to constrain energy production have begun to press down on the economy.

(As I prepared to post this, this headline appears as the Dow drops 400 points: US Jobless Claims Up, Gasoline Lifts Consumer Prices)

Case Closed!

If you ever need evidence that we need a President who understands the importance of energy to our economic growth, you now have it, and if you need further evidence that Sarah Palin is best suited to be that President, I suggest you read up on her own many energy proposals, and look at her record on energy as the Governor of Alaska.  Nobody has done it better.  It’s time to choose, and if you want a future not stifled by policies that are becoming more entrenched daily, and ever more difficult to reverse, it’s time to give serious thought to 2012 and what you’re going to do.  I’m going to support a candidate who knows the way to repair this. I support Sarah Palin, and I say “Drill Baby, Drill!”

Coming to America?

Wednesday, August 10th, 2011

As the World Burns?

Is it possible that the United States is immune to this sort of violence?  As the world economy teeters on the brink of utter collapse, with Europe on the leading edge, its failed welfare states going bankrupt in an effort to put good money after bad, it’s a sobering reminder of what can happen when politicians are allowed to trade their citizens’ wealth for the votes of other citizens exempt from the tax collector’s grasp.  As the welfare state in our own country has begun to grow out of all previous bounds, it’s important to examine our own vulnerabilities to this sort of change.  Our own economy is again on the ropes, largely due to the increasing burden of the welfare state upon the wealth producers in our nation.

This sort of devolution sets up a feedback loop that tends to guarantee a worsening of economic results, which will in its turn undoubtedly spawn more civil and social unrest.  Of course, we’ve been through economic hardships before, notably the Great Depression of the 1930s, but never have we seen a confluence of events combined with the sort of outright radicalism we’re now watching on the streets of London.  In the US, we have had a number of riots, famously in the era of the great struggle for civil rights for African-Americans, but we’ve not seen a potential tinderbox growing like this since the days immediately on either side of our own civil war.  Before we dismiss this threat out of hand, let’s examine what’s driving it, and how it aims to attack our exposed flanks.

One thing that can be said without any controversy is that the riots erupting in Europe have a distinctly socialist, or at least anti-capitalist flavor.  While the anarchists involved seem to hate everything except the hand-outs they receive from government, it is clear that these are ultimately the children of the entrenched and growing welfare state.  It is in such movements that great tragedies have been birthed throughout human history, and they nearly always blossom from the same deadly seed:  These are predominately young people who have been educated by the welfare state to expect to have all their wants and desires met by the welfare state, as though it had been a perpetual parent, and they could remain indefinitely as spoiled children returning endlessly to the nest in which they were raised.

What of our own country?  Are we vulnerable to this same phenomenon here at home?  Ask yourself if we have created a similar welfare state, with a similarly bankrupt public education system in which children are passed through, without much effort, being spoon-fed a steady diet of propaganda based on a  litany of leftist causes that teach the students to expect to be provided their every need or even desire without much effort.  Consider our own welfare system that now provides free food, rent, housing, medical treatment, education, birth control, automobiles, utilities assistance, cable TV, internet, and more recently, cellular phone minutes.  What exactly is it that anybody would go to work to get?  This creates an entitlement mindset that forms into a slavish army of drones who will eventually rise up and destroy the people who so generously subsidized their existence.

You might wonder what would lead people who’ve been handed every material necessity to bite the hand that feeds it, but if you know the intellectually frail sort of mind that willingly subsists in this way, you ought to know that there is no necessary linkage between cause and effect in their thinking or in the formulation of their desires and demands.  As the economy worsens, there will be fewer jobs and therefore fewer opportunities upon which to build a work ethic and a healthy respect for private property or the laws that serve to protect it. What all of this has created is a generation of savages, whose first reflex is to loot, pillage and plunder.  Don’t wonder who has created this growing army of brigands and thugs.  You have.  Your labor and your taxes has been taken to support the birth, growth, and moral depravity of an army that will be turned against you.

Are We Next?

All of this makes clear the endless fallacies of the leftists’ welfare state.  One cannot print prosperity.  One cannot inflate it on the back of the efforts of a few.  One cannot redistribute it, and one cannot nurture into existence those who would create it by teaching the young that they deserve anything they want irrespective of what they have earned.  In the same way that we have collectively indoctrinated our young with a false self-esteem over the last two decades, so too have we indoctrinated them with the notion that they are owed all the prosperity they see in the wealth of others.

We’ve made the dangerous error of neglecting to explain to them that such prosperity is the product of hard work and thorough preparation with a necessarily diligent attitude toward one’s life and prospects.  In short, we have created an army of people who aren’t merely amoral, as some have suggested, but instead thoroughly immoral, who see the world through the cracked and skewed lenses of their own immediate, range-of-the-moment self interests, without respect to their long-term well-being.  “What pleases me right now?”  This is the standard of their moral belief.  They have no reliance on any religion excepting only a belief in the myth of their own entitlement.  If we permit them to go further, we are signing our own death warrants, as there will certainly come the day when they no longer see our value even as those who provide their loot.

In a hopeful moment, the Mayor of Philadelphia, Michael Nutter,  admonished particularly the black youth in his own city who have been igniting their own first embers of a similar fire with the new phenomenon of flash-mobs and the mob violence they have been increasingly spawning.  There will be those who view this as no big deal, and a problem without wider implications because we’ve seen riots in our large urban centers before, but any who would dismiss this as more of the same are making a grave error.  This isn’t a problem confined to urban or African-American areas, but instead a strong tide running through the core of most of the country’s young.  This is a widening of the war against capitalism, and these mobs are the first foot-soldiers.  Make no mistake about it: We are facing a global catastrophe unlike any in our history since at least the civil war, and if we don’t stand to oppose it, we’ll become its victims.  Some of you will be crushed to find that the young people you’ve raised, under your own roof, and of your own flesh and blood may be in the process of joining this wave.  These are the opening shots in a war to determine the course of the world’s future, and it’s time for the real adults among us to begin confronting this now, on the front end, before we inherit a true disaster in violence on the back end.

Our time is running short.

Monday Morning: What Awaits At The Market Open?

Monday, August 8th, 2011

Grim Tidings?

It’s always difficult to suppose one knows anything about how the markets will behave in such a difficult situation, but the early indicators are breathtakingly grim.  Whether this will be merely a correction, or perhaps indicates the beginning of the bottom dropping out, none can say for certain, but this much we know:  When the markets open in a few hours, there’s a pretty high probability that it will be a sore day, on the news that ought to have hit late Friday, but was delayed by White House lobbying.  For the first time in history, the US has been downgraded from it’s AAA rating, and there’s a high probability, as great as one in three according to S&P, that it will be downgraded yet again before the dust settles.  That portends serious consequences in the credit markets, and suggests at least a short-run retreat. What this means to the stock markets when they open isn’t certain, but at the moment, it certainly doesn’t look positive.

How did we arrive here?  Simply put, the downgrade is merely an effect of profligate spending with borrowed dollars on the part of our government.  Deficit hawks have been warning for decades what would be the ultimate result if our spending wasn’t restrained.   We have arrived.  That bleak future may well begin today.  Where is our President?  He has skipped town to Camp David, by all reports, ina pathetic bid for invisibility, and in a play reminiscent of his departure before the large Tea Party rallies in DC.  The problem for the President is that this isn’t going away, and he’s not likely to be able to divert attention from it.  Things are caving in around him, and yet he’s not particularly disturbed by it, and from all appearances, he simply doesn’t wish to be bothered by any negative attention.  Whether he carries on with the “laying-low” approach, or he comes out and  makes a statement of some sort on Monday, you can expect that he’ll be trying to distance himself from any responsibility.  Bet on the Tea Party being blamed, as John Kerry’s already picked up that meme and has been carrying it on behalf of leftists all weekend.  In a clear indication that they’ve long known what was coming, the DC establishment has been setting up their favorite scapegoat for weeks.

Check out this page of Pre-Market data, courtesy of CNBC. For those who dismissed the effect of a downgrade, this should provide an eye-opening dose of reality.

What shall you do?  I don’t offer market advice, ever, because I’m not a paid professional investment adviser, but as you go forward into the coming murky dawn, as the veil lifts to reveal what it will, my advice generally, as a human being, is to preserve value wherever you can.  There may be some buy opportunities, as there sometimes are, but whatever the case, whether climbing, falling, or dropping through the basement, all I can tell you is what I have always told my friends: Prepare for the worst, work for the best, and if you wind up on the sunny side of that equation, smile at your good fortune.  If not, at least you’ll be prepared.

What many expect is another infusion of cash from the Fed at some point, in the form of QE3, as is already being floated.  If so, that’s likely to be a sign that things are worse, so they would do it as quietly as possible, but this strategy is like trying to keep a blown-out tire inflated: Air spills out the breach more quickly than you can pump it in.  At some point, all the pump-priming in the world just won’t get it done, and worse, it could well add to our problem.  At  this point, the proper tack to take is merely the time-tested adage: “Do not put good money after bad.”

Be prepared for the bumpiest ride in at least a generation. Other than that? Good luck to all!

Downgraded America: We Warned Them

Saturday, August 6th, 2011

Not All Vultures made it into Frame

None of the events of Friday night are the slightest bit surprising to economically-aware Americans.  Economists warned you. For my part, I warned my own readers repeatedly, and Governor Palin warned you too.  On the Thursday before the debt ceiling surrender, Sarah Palin tried to cajole members of Congress to a firm stand.  A simple respect for logic screamed a warning in your minds from which there was no means of escape.  We all knew this was coming and we all knew it would be humbling.  Responsible Americans heard the warning loud and clear, but when they relayed the stark warning to Washington, the DC-Axis pretended not to hear the din, or castigated their critics and defamed them as terrorists.

None of this is news to you, who’ve been reading this blog.  If you’ve tuned to Beck, Limbaugh, Hannity, or Levin, among lesser lights, you cannot possibly have missed this.  Governor Palin warned against the irresponsibility of inaction, on her own Facebook page and during Fox News appearances.  Millions of thoughtful Americans made it clear that the Budget Control Act didn’t go far enough.  Washington sneered at them, and Speaker Boehner told Republicans to “get your ass in line.”   President Obama, for his part, continues to mouth aimless, meandering platitudes.  His Treasury Secretary, Tim Geithner, promised repeatedly that this would not happen.  Happen, it has, and now America can count on even worse economic news. It’s going to take real, solid, unwavering leadership to restore all that has been broken in the last three years, and more.

America is not dead, but the policies of Barack Obama, combined with the moral diminution of our nation, have taken her down to her knees.  Appropriately, many Americans have noted our position and prayed.  I know faithful conservatives who prayed daily for the President and the Congress to find the courage to do what was necessary and proper to safeguard the fiscal and financial state of our Union.  As in all things, such prayers may not be answered on a schedule most convenient to mankind, but this doesn’t mean Americans should despair and surrender their country.  At least three years of mostly Keynesian solutions combined with innumerable reflexive statist proposals have brought us to this.  The shocking truth is this: Barack Obama is not fit for the presidency, and neither are any who timidly sided with the Budget Control Act and its additional blank checks for Obama.

On Thursday, when the Dow slid over 500 points, the chattering class told you this was about Italy, and Europe generally.  While there is no denying that these had an effect on the markets, what’s inescapable now is the conclusion I offered you on Friday morning:  The market is revolting against three years of an impossible policy of borrow-and-spend and its immediate implications for our own economic future.  It also signifies the bankruptcy of a philosophy rooted in early 20th century progressivism. Last night, as the S&P downgraded our credit rating, the truth became apparent.  What we witnessed on Thursday was the movement of smart money in response to an impending threat.  All day Friday, the White House worked to stave off this downgrade until the markets had closed, hoping to take advantage of the cooling of passions weekends often provide to nervous markets.  They succeeded in large measure, and it was not until after the last echos of the closing bell had faded into memory when the first tremors from Washington began to move the earth beneath our feet.

This isn’t an ordinary event, yet in the hours leading up to its final exclamation point, the narrative from Washington had already begun to work its way into the media at large: “This is no big deal. There’s no crisis. There’s no reason for panic. It won’t mean higher interest rates.”  Any who have been deceived by past admonitions to abstain from worries should now carefully consider the sources of those remarks.  All needn’t be lost, but we, the American people, must resolve and plan to repair this, and it will take a coalition-building servant of tremendous dedication to lead us in bringing this economy hard-about.

We shall see up and downs; rises and falls, but we must measure the course ahead with care, and not turn to panic or despair.  We will have a chance to begin setting this right when the elections come mercifully upon us in November of 2012.  It is for this coming political season that you must preserve your devotion, energy, and passion.  Any silly liberal can(and will) run screaming into the night in fear and trepidation.  We must be what we are:  The solid foundation upon which this nation still rests.  We must have steel spines and strong constitutions.  Each of us.

To restore what has been wrecked by the ultimate drunken-drivers, we’ll be faced with challenges as few of us will have known.  That doesn’t mean certain failure, but instead only that we must give it our all.  Given the character of my audience, as I have been so fortunate to come to know it, I am well-versed in their capacity to do what is right, rather than what is easy.  We’re coming to that crossroad at which we will now be compelled to choose what sort of nation we will be.  Will we accept endlessly-mounting debt, at each increment yielding a bit more liberty and a good deal more of the futures of our children?

I am reminded of Patrick Henry’s famous speech, and encouragement may yet be found in the fact that our situation is not yet nearly so dire as the one he described.  We are not imminently at the point of arms, and there’s no reason we need ever be if only we will make full use of our power in the political battles before us.  Substituting political decisions in place of that context, let us remind ourselves of his staggering admonition:

“They tell us, sir, that we are weak; unable to cope with so formidable an adversary. But when shall we be stronger? Will it be the next week, or the next year? Will it be when we are totally disarmed, and when a British guard shall be stationed in every house? Shall we gather strength by irresolution and inaction? Shall we acquire the means of effectual resistance, by lying supinely on our backs, and hugging the delusive phantom of hope, until our enemies shall have bound us hand and foot? Sir, we are not weak if we make a proper use of those means which the God of nature hath placed in our power. Three millions of people, armed in the holy cause of liberty, and in such a country as that which we possess, are invincible by any force which our enemy can send against us. Besides, sir, we shall not fight our battles alone. There is a just God who presides over the destinies of nations; and who will raise up friends to fight our battles for us. The battle, sir, is not to the strong alone; it is to the vigilant, the active, the brave. Besides, sir, we have no election. If we were base enough to desire it, it is now too late to retire from the contest. There is no retreat but in submission and slavery! Our chains are forged! Their clanking may be heard on the plains of Boston! The war is inevitable and let it come! I repeat it, sir, let it come.”

We needn’t go further than to admit that our situation is not nearly so desperate.  We have no need of arms, but instead we have a desperate need of people to rise and challenge our adversaries in politics.  Our adversaries names are not only Obama and Reid and Boehner, but also John Doe and Joe Sixpack. We must look to our own homes and hearths and know what is in and amongst us.  We must mend the fences between neighbors. Go out this day and find one honest person, and tell them what you propose.  For my part, I will do so also, and this is what I shall say:

There is no avoiding the truth any longer.  We must reform all that is broken with the people in Washington, and if it means replacing them all, every one, then we must do so, as many as we can, in the coming elections.  We must find diligent and honest servants, and we must advocate their cause in our own names.  We must seek out such leaders as we’ll need, starting most immediately amongst ourselves.  We can choose leaders to help guide us at the top, but no leader can carry on her back the combined weight of the world’s problems.  A leader must find equally firm character in those who will be led, or their purpose is in vain. Where shall we start?  Where have we Americans always started?  In our families, among our neighbors, in our churches, and in the town square are the first steps Americans have always taken toward reform, because we know that for reformation and restoration, this healing tide must flow from within us.

Be of good cheer, despite the screaming headlines. Be solid for those who will need your resolve. Be mindful that when you advocate on behalf of a candidate, or an issue, those who are truly undecided will be watching not only for the logic of your argument, but also for the manner in which you make it.  They who have sat too long straddling the fence, half in terror and half in comfort at the prospect of dismounting their perch will need to know they’re stepping onto solid ground. We must be that solid ground.

What must be recognized is that this downgrade isn’t a cause, but an effect.  We must see even the debt that has brought us to this debacle also as an effect.  The cause at the root of our troubles doesn’t lie with the various issues we see emerging in our time, but with something fundamentally broken in what we’ve allowed our country to become.  There are great dangers ahead, but none of them need destroy us.  None of them ought to be the cause of our demise.  They will mostly be mere effects of what actually threatens our republic.

Glenn Beck had it right in his 8-28 project of 2010, when he said that we must restore our honor.  The “fundamental transformation” we must find cannot originate in Washington.  I’ve been interested to watch, as the new campaign season approaches, who is and who isn’t taking firm and public stands on these arguments in Washington, or elsewhere.  I’ve been watching for signals that an honorable and courageous candidate for President will emerge, and while there have been some hopeful signs from a few of those who have announced, I believe the best is yet to come.  Who shall lead us?  You’ve already had a hint.  On the 28th of August, 2010, before a multitude assembled, she spoke not of politics but on the real meaning of American honor:

Who Shall Lead?

“We will always come through. We will never give up, and we shall endure because we live by that moral strength that we call grace. Because though we’ve often skirted a precipice, a providential hand has always guided us to a better future.

And I know that many of us today, we are worried about what we face. Sometimes our challenges, they just seem insurmountable.

But, here, together, at the crossroads of our history, may this day be the change point!

Look around you. You’re not alone. You are Americans!

You have the same steel spine and the moral courage of Washington and Lincoln and Martin Luther King. It is in you. It will sustain you as it sustained them.

So with pride in the red, white, and blue; with gratitude to our men and women in uniform; let’s stand together! Let’s stand with honor! Let’s restore America!”

Many will have failed to notice that Governor Palin had been telling us this all along.  Some will pretend not to have heard it, not wishing to confront that which they know lies within them.  The Obama disaster isn’t the cause of our troubles, but instead has merely exposed the source of our disease.  Ridding ourselves of his disastrous economic and social policies will not, by itself, repair what is broken.  As Sarah Palin pointed out to the assembled hearing of a multitude, “It is in [us].”  We must repair ourselves from the inside, first, and that means honor and integrity in all we do; in our families, among our neighbors, in our churches and our workplaces we must become as honorable as the names of our cherished beliefs demand.  At every junction, at every intersection in which one must choose between what is comfortable and easy, or that which is more difficult but right, we must be the people who will choose the latter.

It’s your country.  You choose.  I’ve asked what sort of freedom it is that you seek.  Did others think that by avoiding the choice, they would avoid the consequences of not choosing?  Surely not.  What your comments and emails reveal is that my readers and millions more have chosen, and I thank you, but there is much work to be done.  Let each of us go to it.

Stealing America Blind – How to Steal Money by Printing It (or: Sarah Palin Warned Us)

Friday, June 24th, 2011

You may remember candidate Obama telling Joe the Plumber that he wanted to spread the wealth around. President Obama, in concert with the Democrats and Ben Bernanke have been quite busy.

To understand what’s been done, and how, we need to first understand a bit about how money is created. In a simplified model, the Federal Reserve loans money into existence. The Federal Reserve loans the US Government money and the bonds thereby created are sold on the open market to buyers. These bonds are traded globally, and this is why and how the Japanese and more recently, the Chinese, have come to hold so much US debt. Of course, you can buy bonds too. So can banks. It’s seen as an investment, but with interest rates maintained artificially low, the desirability of the bonds on the market slips dramatically.

We no longer base our money on an objective store of value. Many people reference the end of the Bretton Woods agreement under Nixon, but the truth is that we really came off any reliable, meaningful gold standard under Franklin Roosevelt. Roosevelt arbitrarily set the value of the dollar vs. gold by picking random numbers from within a range, pulling numbers out of a hat, drawing cards, or whatever else he dreamed up at the time. (See: “The Roosevelt Myth” by John T. Flynn)

The Bretton Woods agreement merely formalized the process in 1946, but it continued the basic FDR policy: You, as a person subject to the jurisdiction of the United States, could not redeem your dollars for gold. A foreign bank or government could. By1971, your treasury was emptied and Nixon was forced to announce that we could no longer even redeem dollars held by foreigners with gold. For the period between 1933 and 1971, we functioned on a fake gold standard that was propped up by functioning like a gold standard internationally, but domestically, as pure fiat currency. In short, here at home, what we had was monopoly money, but it looked and spent normally because in the international markets and exchanges, where somebody would quickly notice and complain, the money was backed by gold, until the gold ran out. Most of the gold formerly held by the United States was long gone, to pay foreigners when they presented dollars obtained in trade for redemption. It is literally gone. Only a relative token of that gold survives.

So what gives your money value, if not gold? The answer is simple: It is the confidence of the bond-holders in the debtor’s promise to pay. Imagine you purchase a home. If you were borrowing the money, you would of necessity need to find a bank willing to lend it to you. If they saw you had no job, no business, and no assets, you were a poor credit risk, and you’d not get the mortgage. Mortgage companies trade mortgages, just like bond-traders trade bonds. Debts are basically investments based on the value of the interest due. The investor is betting that inflation will not surpass his earned interest on the mortgage, and therefore, will profit slightly as the mortgage is paid in full. Mortgages with higher interest rates can be better investments, but traditionally, they implied more risk because people tend to get mortgage rates based at least in part on their credit-worthiness.

The value of the US dollar is determined in much the same way. The currency is backed in part by the assets of the people who owe money, and in part by the confidence bond markets have in the probability that as the bonds mature, they will be paid in full, with the expected interest.

Now that we know all of this, and with my apologies to all who already did, let’s get on to the meat of this. Barack Obama, the Congress, and the Federal Reserve have been stealing you blind. Over the last three years, the Fed has lent more money into existence than in all the time since WWII. The Federal Government has been the borrower of record, with the total debt incurred by the Congress and President Obama in that period exceeding four-and-a-half trillion dollars. That’s $4,500,000,000,000.00. It’s a lot of cash. The problem is, the economy in no way produced nearly that amount of additional wealth in that period. The effect is simple: Each and every dollar, the new ones and all the ones that existed beforehand, fell in value. This is engineered inflation, or what the Federal Reserve has taken to calling “Quantitative Easing,” which is a fancy way of saying that they’re digitizing or printing more monopoly-money dollars that will go into circulation with the rest of the dollars, and thereby devalue them all.

Last November, Governor Sarah Palin warned about this practice, telling all who would listen that this would drive inflation, and that it would cause food and energy prices to rise dramatically, and thus stifle the economic recovery until it would be stillborn. We are now reaping that harvest, just as she suggested, and while President Obama releases three days worth of oil from the Strategic Petroleum Reserves to try to hide it, the fact is that the economy is in free-fall. Obama and his crowd planned all of this, because they wanted to commit the largest theft in history. Barack Obama is, himself, an economic buffoon. The man doesn’t know a demand curve from an equilibrium price. His advisors, all of them, are following a script laid out for them by a man who knows how to destroy currency and steal the wealth of nations. He is considered an ‘economic terrorist’ in much of the Pacific rim. I speak of none other than George Soros.

Now, we could delve into the why and how, but it’s much more important, I think, to show you a simplified illustration of how this is being done. I’ve created a few charts here to help illustrate how this works. I’ve simplified it so as to promote understanding, but I am going to explain what you’re looking at, and when you’re done, you can draw your own rational conclusions.

In the first chart, we are starting at day zero. On this day, a dollar is worth a dollar. There are a total of 400 in circulation, and they are distributed as shown. I assume that on day zero, a gallon of gasoline costs $2, and a loaf of ordinary bread costs $1. This is the baseline. You may wonder who is Person 1 , Person 2, Person 3, and Person 4. For the sake of argument, however, we’ll get back to that. Also notice the purchasing power. Notice how many loaves and gallons each person can buy. Take a look at day zero(You can click the image for a slightly larger version:)

Now remembering that there are $400 in total, let’s imagine the Government borrows another $200 from the Federal Reserve, and the Fed must borrow it by issuing bonds. Now there’s a total of $600 in the economy. The Government takes the newly printed/digitized dollars and distributes them, $50 each, to all four persons. There is no new value in the economy. The money’s value has dropped by 50%. Expressed another way, the money is now worth only 2/3s of what it was worth on day zero. Let’s call this day one, and take a look:

As you look at the chart above, you immediately notice that the distribution of wealth has changed. Person 1 and Person 2 have both picked up their share of the wealth. Person 3 has lost a little, and Person 4 has gotten clobbered. Notice that we didn’t ‘tax’ a soul. We merely printed more money into existence, and distributed it differently. Now notice what has happened to the purchasing power of our four persons. Also note that the cost of the gallon and the loaf has risen accordingly. We’re not finished, however. We’re going to come back around and do it again:

Now look at the results. We’ll call this day two, or if your prefer, we can use Federal Reserve Chairman Bernanke’s term, “Quantitative Easing 2.” Notice what has happened. We’ve shifted a good deal of wealth to Person 1, a little bit to Person 2, stolen just a bit from Person 3, and taken Person 4 to the cleaners.

Notice that the price of a loaf and a gallon have doubled. This is because you now have twice as much money in circulation, and no additional material value. Here’s what you need to know, however. Person 1 can be a welfare or other entitlement recipient, or a foreign citizen in a foreign land to whom we’ve gifted money. Person 2 can be a low-skilled, low-wage worker, just below the median income for a family. He’s struggling, and barely getting by. Person 3 is solidly middle class. He either works in a higher-skilled field, or is even self-employed, like Joe the Plumber. He probably barely notices the effect, at first. Person 4 is everybody above that. This is the person that creates almost all the jobs in a free market economy. How do you now expect him to do that?

As Tammy Bruce reminds us, Sarah Palin warned us that this would be the result. Those of us who actually know anything about economics(as opposed to the LameStreamMedia) knew that she was right when she said it. Time has born her thesis. Where was Mitt Romney? He said it was ‘necessary.’ Where were the rest of the Republicans? They were all joining Paul Krugman and Barack Obama in laughing up their sleeves at Mrs. Palin. Most importantly, however, where were you, and what did you believe? Or were you making Thanksgiving plans while they carried out another round of theft?

This is the policy of “spreading the wealth around” that Barack Hussein Obama promised. He’s delivered, but he’s not finished quite yet. Now that he’s thoroughly clobbered the wealth creators by devaluing the dollar, he’s next going to take the rest via taxes, if the Republicans fail to stop him and his cronies in the Senate. If they do, it won’t matter, because he’ll soon announce, through his stooge, Ben Bernanke, perhaps yet another round of Quantitative Easing. They’ll call it “QE3,” and all you will need to know is that another round of theft is underway. It may have worked too well already. Remember when Rush Limbaugh was criticized for saying he hoped Obama would fail? This is what he hoped would fail. It hasn’t. Your wealth and your life are under assault. There is only one answer to this, and it is to send Barack Obama back to Chicago, with the rest of the thugs, and I know just the lady to do it!