Most of us who look around at the economic conditions in the country woke up scratching our heads at the outcome of the election. Under these economic conditions, how could voters fail to reject the party that has created the catastrophe of inflation, skyrocketing energy prices, and mounting food prices? This question seems vexing at first, but it’s really not so difficult to understand. Democrats are professionals at stealing elections, but they’re also professionals when it comes to setting a legislative agenda that will later backstop their political aims. Democrats knew what they were going to do, as far back as the beginning of the pandemic, and what they’ve been doing since was designed to carry it into effect. They’re diabolical, and with respect to inflation, they knew full well what they were going to do. Inflation didn’t matter in this election to their voters. Why? The reason your red wave became a trickle is because Democrat’s constituencies scarcely feel it, at least to the scale working Americans have been feeling it. Democrats undertook a plan to drive inflation while insulating the bulk of their own voters from it.
Borrowing new money into existence is how one goes about making inflation. As Milton Friedman taught us, systemic “inflation is always and everywhere a monetary phenomenon.” If one wants to create inflation, one need only increase the money supply without a corresponding increase to the value of the whole system. Democrats knew this. They printed more money into existence in the period of the so-called “pandemic” than any other period in our history. To add to this, what they did was focus the end-point for much of this cash into the pockets of their voters. Starting in the Fall of 2020, they increased payments in programs such as SNAP(our modernized food-stamps program) by percentages in no way justified by market conditions at the time. A twenty-five percent increase in SNAP before the onset of significant inflation helped create that inflation, but more than this, what it did was to indemnify Democrats’ key demographics against the policies that Blue States and the Democrat Congress were imposing on the rest of us.
To get a red wave, in this environment of constant Democrat chicanery, you cannot possibly win when all of their key constituencies are being made whole by COLA increases and so on. Democrats rely on the dependent folks to swell to the polls in election after election, and they’re quick to remind them who got them the loot. Think of it. We know that roughly half of Americans get a government check directly. Still more are on the government teat somewhat indirectly. The entire education establishment from college to kindergarten is heavily latched-onto the government teat. This isn’t rocket science. If you want to know why Democrats could manage to win in this catastrophic economic condition, you need only realize that to a large degree, their voters aren’t feeling it.
Ladies and gentlemen, the evidence is everywhere you care to look. We’re sliding off an economic cliff, and today’s jobs report is more evidence. Contrary to what the puppet Obiden Regime is telling you about the performance of the economy, the truth is dramatically worse. Their continued reliance on printing money, and sending out support checks/benefits, is driving us into a ditch, and that ditch looks like the Grand Canyon. We’re told the pittance of 199,000 new jobs created last month is good news. Folks, at that rate, the workforce size is shrinking, or at best, flat. Hidden beneath all of the nonsense being spewed by the labor department is a contraction in the size of the workforce, or “labor/workforce participation.” This tells the truth, and it’s the thing they can’t hide. Workforce participation is falling off a cliff. If this government wanted to change the dynamic, they’d immediately halt all hand-outs and drive people into the workforce. Instead, they’re supporting people to remain unemployed, and this is leading to the supply chain problems you’re experiencing, but it’s going to get worse.
The simple fact is that the people now running the United States are intentionally driving us further into crisis. Soon, we’re going to see inflation at levels none of us have experienced before. The longer they drive this false COVID crisis, the worse it will be. There’s no way this is accidental, and anybody telling you that in the future is either a dupe or a liar. It’s now so late in the game, preparations may no longer be possible. I’ve always advocated preparedness here on this site. Time may be short. While I was writing this up, Sundance over at TheConservativeTreehouse has posted a dire warning. I’d urge you to heed it.
Our economy stopped recovering the moment Joe Biden stole his way to the Presidency. I can’t say this strongly enough: It’s not accidental. It’s the plan.
The whole thing is a put-on. I don’t mean there isn’t a virus, but the whole over-hyped panic is just that. On Thursday, this past week, I saw that there were real signs that the fog was lifting. People were beginning to question the whole thing. It’s not that anybody thinks Coronavirus 2019 isn’t real, but that the statistics were being questioned, and the models were being questioned, and finally, Dr. Anthony Fauci and Dr. Deborah Birx were being questioned. More, the reality of the unemployment numbers was coming to light, as an additional 6.6 million Americans added to the unemployment rolls that had already surged by 3.3 million the week before. That’s basically 10 million Americans, whose jobs are gone. More, businesses are now going belly-up, unable to sustain themselves in a shutdown or even skeleton-crew condition. Real people, with real businesses are losing their businesses, not because they did anything wrong, but because of some order by a government official. Those officials will all claim sovereign immunity to any lawsuits, but no matter what anybody claims, it is a real “taking” as the Supreme Court’s interpretation of the Fifth Amendment defines it. They’re being wrecked, and their employees will have no jobs to which they can return. This must end. On Thursday, the American people finally realized it, and began to say so. Now, finally, two days later, it seems our President, already inclined to think along these lines, seemed to have gotten the message. In a lengthy briefing on Saturday, he said “We have to open…” He said it more than once.
After the debacle of the Fauci/Birx reliance on the statistical models, some of which were provided purportedly by the Bill and Melinda Gates Foundation, people were beginning to question not only the obvious distance between projected death rates and reality, but also some of the underlying stories used to sell the panic. One YouTuber, channel name: AmazingPolly, who is an excellent researcher found some interesting problems with the video package prepared by the NYTimes about the catastrophe happening at the Elmhurst, Queens NY hospital. What’s interesting is that the video is now all in question. CBS famously aired footage that looked like a serious situation, allegedly in NYC, but actually from Italy. Other footage and stills showed lines of coffins that were actually from a movie. The media is a pure propaganda arm of the Democrat Party. At this point, it truly is the Democrat-Media Complex. The idea is to sell panic. The idea is to push the country as far down into the ditch as is humanly possible, because there’s really no other way for them to defeat President Trump. They’re willing to wreck America to get rid of him, and to cause the death of additional Americans if necessary. There’s really no bottom to their black hole of hatred for this country. They see Trump and his supporters as the last obstacle to vanquishing America, the land of the free and the home of the brave, forever. This is not hyperbole. They hate us that much.
I will tell you that the longer I observe the whole of our national polity, I am continually amazed at how absolutely disgusting is our so-called “Mainstream Media.” Sarah Palin had them pegged when she called them “Lamestream,” but lately, they seem to be more diabolical than that.
Back to the hospital in Elmhurst, Queens, why would they choose that hospital to target for their big scare story? On whom would this have the greatest effect? Amazing Polly figures that out for us, if we hadn’t guessed who might be from Queens, NY, who might be the target of a media disinformation campaign:
https://www.youtube.com/watch?v=cAnSkQojE_4
Every time I get the chance, I thank Polly for her work via Twitter. This video deserves a thorough watching. She admits up front that she can’t necessarily prove all of her conclusions, but she is always careful to provide documentation for the material she presents, in the information attached to her videos on YouTube. You can follow her on Twitter @99freemind. I don’t necessarily agree with her on everything, or subscribe to all the theories she presents, but I can tell you that she works very hard at her research, and she is very thorough, and also that she provides an alternative view of events and history that can offer a perspective that reveals new things the Lamestream Media will never, ever tell us. Give her a view if you haven’t already, and take the time to Like the videos of content creators like her and Dan Bongino.
Another person with whom you will cross paths if you research this overall CoronaVirus2019 shutdown is Candace Owens. Some of you will be familiar with her from FoxNews, or from other platforms, and on Twitter, she’s @RealCandaceO. She has real courage in many respects, and one of them is her willingness to take on the #FakeNews, particularly with respect to issues of race, and also with the pigeon-holing of black Americans as Democrats. She’s exposing those myths, and she has a new book coming out. Now, she’s exposing the governor of Connecticut who actually blamed the death of an infant on CoronaVirus when in fact, the death was due to being suffocated:
Since word is getting out— I can now confirm that the infant in CT was accidentally suffocated by its caretaker, who then called the police. @GovNedLamont KNEW this, & then lied to the world by linking it to the #coronavirus because he wants more Federal money.
He should RESIGN. https://t.co/q6L5V55DWh
This sort of displacement of blame onto CoronaVirus is rampant in states run by Democrats. It’s being done to grab more of the federal relief money from the $2Trillion package that Congress passed last week. It’s despicable, and it accounts for at least some of the mounting death toll being reported all over the news. It’s fraud. They’re mostly going to get away with it, since they compile the statistics, and they control the medical examiners, although these will mostly be considered “natural causes” and will never undergo autopsies. I’m not suggesting that there are no CoronaVirus deaths, as I’m sure there are, but as I covered in my previous article, this is all being blown way out of proportion. Now, we have even more evidence that this whole panic is contrived, and we also know the motive: This is all about elections, money, and power. What else? The idea here was to trap President Trump so that he would have to shut down the country. Instead, he left it to governors, as he should. He focused on the Federal response as is the job of the President. In short, he took the steps appropriate to the President under our constitution, but this is also why the Democrat-Media Complex kept pressing the President to take more steps, and force a state quarantine in New York.
Today, at the press briefing by the President’s CoronaVirus Response Team, he made it plain: “We have to get back to work.”
Remember, if it’s bad for America, Democrats approve. If it’s bad for Trump, Democrats insist. The media is now so utterly broken that the smarmy reporters in the room can’t help but become snotty in their questioning of the President. If I were the President, I’d throw at least half of them off the White House grounds and tell their networks or papers to try again with somebody else. There was never this kind of conduct toward President Obama. Not once. Not even during his most miserable and provocative failures, when actual reporters would be expected to be more insistent in their questioning. Here, the way these reporters talk to the President of the United States is an utter disgrace. Even were I given the opportunity to question Barack Obama in the White House in the aftermath of Benghazi, I’d never have been so basically rude and disrespectful. I certainly would have asked a couple seriously difficult questions. The problem here is that the media doesn’t really want any information. They’re not really asking questions designed to reveal any news, but merely questions aimed at catching the President in some inconsistency, or in some sort of disagreement with one or more members of his team. In some cases, they’re plainly argumentative. Just once, in the eight years of the incompetent and corrupt Obama administration, they should have gone after that President with such fervent zeal. Instead, they blithely pitched softballs that even the increasingly confused Joe Biden could hit out of the park.
Over the last few weeks, as the nation has attempted to deal with the WuFlu pandemic, one of the things that’s gotten short shrift is the economy. We had an economy in pretty good condition by the middle of February, and as you’ll remember, unlike during the Obama administration when the jobs numbers were “unexpectedly poor,” instead our Department of Labor found itself having to upgrade the numbers in weeks following original reports that understated the economy’s performance. Now, we’re losing jobs at a phenomenal rate, and President Trump has to do something to bring the economy back online soon, or the country will be wrecked. Most of the small businesses shutting down are highly leveraged, and with a halt in revenues, they’re facing serious, perhaps catastrophic, consequences. The typical situation looks like a Mom-and-Pop shop of some sort, opened up a business on tight margins, perhaps by re-mortgaging a recently paid-off home. Now, shut down by order of some public official, usually a governor, county judge, city manager or mayor. they find themselves without revenue. They have to lay off their employees, as a matter of pure financial survival, and then, within a month, they’re staring down the barrel of that debt service, and if they can’t service it, not only will they lose their business, but they might just lose everything. They’ll never be able to reopen. They’ll never be able to call up employees and offer them their old jobs back. Instead, the avalanche will gather momentum and mass, with a mounting depression at the bottom of the hill.
I am reminded of a line by Bruce Willis in one of the many Die Hard sequels. The young guy he’s escorting to the FBI makes an off-hand remark about crashing the “system.” Willis’ character stops, and lets the kid have it a bit: “It’s not a system. It’s people!” Or something to that effect. His point was to say it is very easy to imagine shutting down a system like shutting down a computer or an assembly line. For some reason, when people eliminate the myriad complications implied by specific, concrete human beings, it become easy to be cavalier about their disposition. The point Detective McClane was making is that “the system” is really people, and what you’re really talking about wrecking is the lives and dreams and aspirations and plans of real live people, just like you.
Democrats suffer from the same childish misunderstanding and unfocused view of the world around them. It’s easier to imagine an amorphous system that just gets “shut down.” The same is true of the economy. They see it like turning off an engine. Instead, it’s like putting a country’s worth of people into suspended animation, only without the preservative aspect. The decay, the atrophy, the heart failures and the deaths begin to mount immediately. In short order, it’s much worse than any disease. Our country is much more complex than most people imagine, but the fundamentals of the situation are simple. We’re wrecking the economy, which means we’re wrecking businesses and that means we are wrecking people. Each minute this goes on, more businesses are lost, and with them, jobs die. Most of them won’t be back, and this is where people who don’t understand the entrepreneurial cycle fail to see the real danger: Small business creates a sizable majority of jobs in the United States. If you’ve just gone out and created a business, and had it wrecked by a government-ordered closure, and probably lost substantial money, or worse, had your entire life’s work demolished, assuming you find yourself in the position to launch another business some day, would you? Why? The next time a virus comes along, the government might just shut you down again.
It isn’t simply that this response to this virus was overblown and entirely unnecessary, but that the entire methodology is bankrupt, unfeasible, and wrong. We must never permit this kind of shutdown again. Ever. Under any circumstance. We have created a situation that will take years to repair, if it can be fully repaired at all. Your individual rights are not and must not be subjected to the vagaries of virologists’ models. Your liberties must never be placed in the hands of governors, mayors, county judges, and other elected numb-skulls whose motives and decisions will always be dominated by politics, their public declarations to the contrary notwithstanding.
Ladies and gentlemen, the worst aspect of the great WuFlu shutdown of 2020 is the precedent set by permitting government to behave this way in the first place. The very idea that the government can order the shutdown of the country is a preposterous notion. This is tyranny, whether you’ve recognized it or not. For the business owners whose concerns are now in serious jeopardy, if not already wrecked, this much is obvious. They’re carrying the largest burden in this entire fiasco, and those of us who do not bear their burdens should be thoughtful about the losses they face as a result. It is their lives and liberties, along with the properties of these entrepreneurs that have been cast onto the pyre of sacrifices created by this exercise of government authority.
I believe President Trump has been played, and the economy laid waste as a result of his desire to safeguard the lives of Americans. I believe the people upon whose guidance he relied are not all good people with innocent or virtuous motives. I also believe that certain elements opportunistically joined into this attack on our country. I know the President was trapped between doing what he believed at the time to be the best path for saving lives and what he knew would be catastrophic for the long-term economic and financial health of the country. I can forgive him for his motive of protecting and saving lives, but I’m less forgiving in another aspect: He should have recognized that the people around him were simply another brand of deep-state players, equally corrupt and equally apt to carry out a different form of a coup d’etat. If you don’t see that this has been the motive, I’d urge you to look more closely.
From: Cheryl MillsTo: Hillary Clinton Date: 2013-01-23 11:21Subject: TODAY’S PERFORMANCE
UNCLASSIFIED U.S. Department of State Case No. F-2014-20439 Doc No. C05797268 Date: 12/31/2015 RELEASE IN FULL
From: Mills, Cheryl D <MillsCD@state.gov>
Sent: Wednesday, January 23, 2013 6:21 PM
To:
Subject: FW: Today’s performance From your doctor admirer From: Fauci, Anthony (NIH/NIAID) [E] [mailto:AFAUCI@niaid.nih.gov]
Sent: Wednesday, January 23, 2013 6:10 PM
To: Mills, Cheryl D
Subject: Today’s performance
Cheryl: Anyone who had any doubts about the Secretary’s stamina and capability following her illness had those doubts washed away by today’s performance before the Senate and the House. She faced extremely difficult circumstances at the Hearings and still she hit it right out of the park. Please tell her that we all love her and are very proud to know her.
Warm regards,
Tony Anthony S. Fauci, MD
Director National Institute of Allergy and Infectious Diseases
Building 31, Room 7A-03 31 Center Drive, MSC 2520
National Institutes of Health Bethesda, MD 20892-2520 Phone: (301) 496-2263 FAX: (301) 47-4409
E-mail: afauci
The information in this e-mail and any of its attachments is confidential and may contain sensitive information. It should not be used by anyone who is not the original intended recipient. If you have received this e-mail in error please inform the sender and delete it from your mailbox or any other storage devices. The National Institute of Allergy and Infectious Diseases (NIAID) shall not accept liability for any statements made that are the sender’s own and not expressly made on behalf of the NIAID by one of its representatives.
I live in Texas. I spent the weekend hunkering down in the deluge of the Northern-most outer bands of Hurricane Harvey. Though not nearly as bad off as those under the hurricane and subsequent tropical storm away to our South and Southeast, we will have our share of drenching rains and attendant flash-flooding. Watching television, I am struck by how Texas elected officials are spending so much time in front of cameras, including even Texas Attorney General Ken Paxton. During several weekend appearances on FoxNews, Paxton reassured the audience that Texas has some of the strongest “anti-gouging” statutes anywhere in the country, with additional or enhanced penalties for those who “take advantage of the elderly.” I’ve seen enough of this in my lifetime to know that these laws are abominable. Not only do they violate the property rights of traders, but they also cause an irrational element to rush into our economics. Politicians of any party who support these laws do so in opposition to all the laws of the universe, and further degrade our social fabric by institutionalizing vast immorality. I urge the immediate repeal of such laws, and constitutional amendments at both the state and federal levels that would implement severe punishments on any public official who would attempt to intercede in this fashion dress in the free market. These laws result in the misallocation of resources, the violation of individual liberties on a massive scale, and in some instances, additional death and mayhem. Perhaps worst of all, it encourages complacency and sloth, rewarding both with unjustifiably low prices, while punishing those who had the foresight and self-discipline to plan ahead.
If you purchase a large stock of some commodity, let’s use bottled water as our example, well in advance of some localized or regional emergency, with the notion of selling it at some future date for a profit, you’re simply doing business. If there comes to be some shortage of bottled water, you would be in a good position relative to the market, and would be able to increase your price to whatever level the market would bear. The equilibrium price for bottled water would shift dramatically upward, and you would make a tidy profit, in a free market. In Texas, as in many other states and localities, there are laws that prohibit the raising of prices for commodities for various items and commodities when an emergency is declared. This extends to items like generators, pumps, flashlights, and other items frequently needed in the aftermath of some calamity, natural or otherwise. The idea is that those who sell such items should not be left in a position to “take advantage of an emergency.”
This is a ridiculous notion. Every trade in any market under every condition is a situation of either the buyer or seller (and most frequently, both,) believing they are in the more advantageous position in the trade. What politicians call “price-gouging” is merely the natural result of a free market in the face of scarcity. What politicians cynically do is to take advantage of the consumers’ sentiments in this situation. If there are any profiteers in an emergency, people who are abusing their positions to make undue gains on the basis of tragedies, it is the politicians who make political hay off of disasters. These laws, all of them, are immoral and fly in the face of all rational economic theories. Let’s examine the consequences:
The owner of the commodity, in this case the seller/reseller is prohibited from getting the greatest possible value from his/her foresight, investment, and simple commercial activities. Why would anybody go through the trouble of stock-piling any commodity of any description, dealing with transportation and storage, as well as distribution, if merely the act of maximizing one’s profits is an activity to be punished? This means if you merely prepare, following the model of the ant rather than the grasshopper, you can be seen as profiting from a disaster. Obviously, the net effect of this will be to discourage the stockpiling of commodities in the private market, and that can have yet another unintended consequence: Increased human suffering.
Human suffering will be increased under these laws because it doesn’t matter how cheaply a commodity may be priced if it’s unavailable in the place it’s needed at the time it’s needed, for customers willing and able to pay. Imagine if this same mindset was applied to other aspects of life. Take for example the “convenience store.” Nobody would buy anything at the prices charged for common items in your average convenience store except for the fact that why you’re paying the premium price is for the convenience of getting the goods when you need them, where you happen to be when that need arises. Naturally, if you apply the same notions manifest in these immoral “anti-gouging” statutes, then all convenience stores should go out of existence. In fact, so should all big-box stores. All grocery stores should likewise go out of existence. In fact, anybody between the producer and consumer should be forced out of business if you are to take this idea to its logical conclusion, because what they all do is to profit by providing a convenience and efficiency in distribution.
Naturally, the things these statist villains ignore is their unremitting violence against individual liberty. Some of these people claim to be motivated by justice and freedom, but an examination of their advocacy in this context unmasks the truth: They don’t give a rip about your private property rights, or your life, or anything else. Instead, they care deeply about maintaining power and the politically-obtained positions they enjoy because people don’t think these things through before making emotionally-based demands of their government(s.) If I own a warehouse full of bottle water, having taken the time, having invested the money and effort to build it, maintain it, stock it, and then protect it, why shouldn’t I be able to sell it for whatever price I can obtain? What moral principles are in question? Obviously, this is another example of collectivism versus the individual. More, if I need a bottle of water, who is Ken Paxton or any other politician to insert himself or the force of government if I am willing to pay even one million dollars for a bottle? Does Attorney General Paxton have the right to stop me from drinking? Naturally, because he’s a politician, he would argue that he’s merely forbidding somebody from taking advantage of my thirst, but what if the seller simply says: “Never mind, I’m not interested in selling.” Will Mr. Paxton put a gun to his head and force him to sell at a price Mr. Paxton permits? You bet he will. You can be assured that Mr. Paxton and all the other statist thugs are more than willing to do precisely that for their own political advantage, or to suit their own broken, irrational, and inconsistent moral exigencies.
The other problem with all of this is that it discourages rational behavior and planning. Why worry about keeping a relatively small but nevertheless potentially critical household stock of important commodities? I have many things in excess of my immediate consumption needs, all on the basis of the idea that I don’t have perfect knowledge of all circumstances that may suddenly arise. I have food storage, not a ton, but enough that we could subsist a few weeks, and we have enough water, and in a pinch, we have generators, and if things get really bad, I suppose that horses could come back as a means of transportation. The point is that we all make choices, and some of us make better choices than others. Those who make poor choices or simply act irresponsibly find themselves facing higher costs than those who make better choices and/or choose to prepare. The anti-gouging law favors the irresponsible and those who make poor choices.
On Saturday, during the news coverage, a number of people were shown walking out along a rock out-cropping among the white-capped waves at the coast, taking selfies, and otherwise acting foolishly in what can easily devolve into a life-threatening situation. The newscaster remarked that they were not only risking their lives but also the lives of first responders who would be called upon to save them if they happened to get blown or washed into the bay and caught in the strong current. I am not a first-responder, but were I, I would refuse to risk my life for such people, and the mere fact that we ask first-responders to rescue such irresponsible people is the main reason we have so many irresponsible people. Start letting such fools pay the full cost of their foolishness without any extraordinary measures to rescue them from their own choices, and suddenly, as if by magic, people will begin to make better choices.
Subsidizing sloth and stupidity never profits any society; neither does punishing ambition or foresight. Law should never demand the irrational, and must never impose the immoral, yet that is precisely what these laws manage to do. For the sake of full disclosure, let me state that I am not now nor do I expect at any time in the future to be among those who could profit from the repeal of these laws, inasmuch as I don’t possess any substantial stocks of any commodities beyond those for my own uses. On the other hand, should the day dawn in which I find myself in need of a commodity that has otherwise become scarce, I will be willing to pay such price as may be necessary to obtain it, should I have managed to fail to foresee and prepare.
Scarcity of an item at a particular time and place when combined with the quantity demanded by the market should always be the driver of the equilibrium price. When government intercedes in economics, it always, always has [allegedly]unintended negative results, even though governments and their cohorts in media do their level best to hide this fact from you. A more recent example of this is the debate over the repeal of Obama-care. Government stooges claim that were Obama-care to be repealed, some millions of people would lose their coverage. What government stooges and their cohorts in media do not track, and desperately do not want you to track, is the number of people who lost coverage or saw the value of their coverage destroyed by the institution of Obama-care. Government stooges do not want you to see the people who, in order to avoid the government fine, pay for insurance their health and risk levels would not justify. Nobody tracks the opportunity cost of where all those dollars might have been spent or saved in other ways, that might have made marked improvements in the present or future standards of living of the people in question. No, such numbers are harder to derive, and it’s much easier to claim some ridiculous numbers on the basis of who is in the government program at present as some measure of the program’s alleged successes.
I am certain that on some future date, Texas Attorney General Ken Paxton will claim that some number of Texans were spared from price-gouging by the immoral law he now so adamantly enforces, but there will never be a day when there will be a count of the people who were deprived of commodities because there was no seller selling it, due to the lack of potential profit. Paxton, like every other statist thug on the planet, will claim a victory. It is no different from Venezuela, where their dictators, current and previous, proclaimed victory over the free market by the compulsory lowering of prices, but not one word will be uttered about the extreme shortages of all the basic commodities, even toilet paper. None but the politically-connected elites can find food or toilet paper, no matter the price.
One of the more frustrating things I encounter daily is the absolutely thorough economic ignorance of most people. Clearly, our public schools don’t teach economics, or to the degree they do, it is only of the fraudulent Marxist derivatives. One person I spoke with this morning complained bitterly of the twenty cent jump in the cost of gasoline we’ve seen since Friday, and actually applied the term “price-gouging” to describe it. This is the prevailing nonsense among most of our people, and it is the reason cynical politicians like Mr. Paxton are able to make so much mileage on such immoral, irrational laws.
The truth is that at the moment, roughly one-fourth of the refining capacity of the United States is shut down in the wake of Harvey, and only some fraction of that will come back on-line soon. The distribution chain is broken, with all of the flooding and so on, such that fuel tankers that routinely transport truckloads of fuel through the remainder of the state are not able to maintain their normal delivery schedules. This leads first to spot shortages, as some gas stations run out of the commodity. Depending upon how long this goes on, it will spread in broader and broader bands of localized shortages. This drives prices. Gas stations do not keep a large inventory of fuel. They get daily deliveries, sometime multiple daily deliveries, and the price is adjusted based on the expected quantity demanded. In any such environment, prices go up, and they can ratchet up quickly. Much of it will depend on how quickly the refining and distribution channels are restored. Still, most Americans do not understand economics, and don’t really care to. Instead, like the throngs of the economically ignorant in Caracas, Venezuela, they only demand, but do not know anything about how the commodities they take for granted are delivered to them at the time and place they need them, or how that production and distribution chain is at the mercy of all sorts of factors. No, like the multitude of nitwits who AG Paxton is racing to reassure, they only demand. They give no thought to supply, or to its scarcity.
This is the direct byproduct of a people now too accustomed to governmental intervention in all facets of the free market. Rather than a people who understand economics, and who understand the concepts of supply and demand, we have instead a country of people who expect the government to solve all their problems, and they believe that prices higher than they will happily pay are a problem to be addressed by government. If you consider the absurdity of a people who will happily queue-up for the latest iPhone, shelling out hundreds of dollars for a device that can be made useless at any moment by a strong wind in their vicinity, who will not happily pay one hundred dollars for a case of bottled water in the place they find themselves in a time of scarcity, you begin to recognize the problem. These are the same people who believe Internet should just “exist,” and bandwidth should just “be there,” without payment, and without cost to them, the consumers. This economic irrationality is exceeded in scale only by the immorality of those who accept it.
We will become a country like Venezuela. Some will say that we will have deserved it. Those who say that will not have been wrong.
I hear and read endless speculation about this one and that one, and who’s in and who’s out, always superseded by the next day’s news, and always bereft of any measurable facts. All of this can be both entertaining and frustrating. All of it may be altogether pointless. You see, the country is dying now. By the time a new president is inaugurated in January of 2017, on our present course, it may not make any difference. The country may be closing in on that tipping point, if we haven’t passed it already, at which nothing will be done to save us, irrespective of party, principles, or propaganda. Our nation is deathly ill, if not terminal, and yet the politicians continue to chatter on as though there’s no end in sight. Ignoring the stock market, which is many thousands of points over-valued due to cheap money practices at the Federal Reserve, this economy is a wreck. As always, I urge my readers exercise care in what they believe or are willing to consider plausible. In this post, I intend to revisit a topic I haven’t covered in a long while, because I think you ought to consider it. The subject is the very real possibility of a hyperinflationary great depression that will make the 1930s look like a day at the beach.
As a reference to what hyperinflation looks like, here’s a graph of the infamous hyperinflation in the German Weimar Republic:
German Hyperinflation 1918-1924 (Wikipedia)
Long-time readers will remember I have used John Williams’ ShadowStats website as a reference in the past. The nature of Mr. Williams’ warning hasn’t change, except to become substantially more strident inasmuch as such a calamity now seems to be possible at any moment. For those of you who don’t remember, here was his Hyperinflation forecast of 2012:
In these reports, Mr. Williams goes to extraordinary lengths to describe to you what I’ve told you right along, since the birth of this website: Any alleged “economic recovery” was a fraud, and the nation is in deepening financial and economic trouble. Naturally, it’s not as though you hadn’t suspected it on your own, the obvious signs being what they are, but with the drumbeat of media, many people are soothed into complacency over a long enough time such that they begin to doubt what their own eyes and wallets are telling them. In these most recent installments, Williams goes into great detail, putting numbers to the assumptions, providing actual data to support his conclusions. In this sense, it is time for another reality check, because while the bulk of the people you know may well be ignoring hard reporting, in favor of popular media garbage, somebody ought to be warning them. Chances are that being the good citizens most readers here tend to be, and being the sort of people who are trying to save their nation from disaster, you’ve been warning them right along. Now, when they dismiss your warnings, you can dare them to read these reports.
If you’re among that number of people who are desirous of dismissing all of this as “Chicken Little” talk, I’d dare you directly. Read these reports and if you aren’t at least a bit concerned, concerned enough to learn more, there’s no reaching you anyway. In 2011, Sarah Palin and others were sounding the alarm. She was ridiculed and mocked, but the hard data supported her warnings. All along, I’ve been warning you of the dangers of the monetary policy of the Federal Reserve, and the grotesque expenditures of the Federal Government. In the years since 2008, when this latest crisis began, the Fed has borrowed into existence a sum approaching(if not exceeding) fifty trillion dollars.
All of this money-printing or “digitizing” will necessarily lead to a calamity of unprecedented scale. There can be no escape from the laws of economics, any more than there can be an escape from the law of gravity. The only question is: When? As Mr. Williams points out in his report, the conditions are already in place. It’s simply a matter of triggers. With that in mind, I’d ask my readers to prepare to the extent they are able.
Some will argue that all of this is tantamount to alarmist fear-mongering. but Williams does offer this, in his second installment for 2014:
“Conceivably, immediate massive and fiscally painful action by the federal government to restore and maintain long-range U.S. government solvency still could avoid the looming dollar collapse, but the related political issues appear now to have been pushed off until after the 2014 midterm election, again, as those controlling the government continue to push politically-difficult choices and actions as far into the future as possible. That has been explicitly demonstrated in actions by both the White House and Congress in the last several years. Nonetheless, despite political efforts to dodge the issues, the U.S. dollar and the deficit do matter, and the looming financial storm likely will break before the election.”
In other words, getting our financial and fiscal house in order could still serve to avoid this calamity, but as he notes, and as we are all too aware, the probability of that being done is low. The question isn’t “Will there be pain?” The real question is whether it will be pain we choose while we maintain the ability to moderate it, or an uncontrolled and apocalyptic pain from which there will be no recovery. We’re very much like a stage four cancer patient in that only the most radical treatments have any chance of saving us, and the chemotherapy and radiation will be so severe and thorough as to inflict more pain than we might want to endure, but failing to choose this, the results are known and unavoidable.
I have significant doubts as to whether there exists the political will to induce pain via the radical treatments necessary. The politicians in Washington DC are hoping to stave-off this calamity through the current election cycle. I believe this is folly, but I also know they’re banking on the notion that they will be able to deal with this after the election, but you and I know the truth: There’s always another election. The dust will still be settling from the 2014 election when the first real moves for 2016 begin. They will already begin to make the political calculi about how to survive through the next election, or how to save the next election for their respective parties, but none of them will be thinking about any of this. The truth is that saving the nation will be furthest from their minds.
We have a president who is a functional economic illiterate, driven by dogma of a failed ideology. We have a Congress driven by short-run notions of self-preservation of their power. We have a people who possess a low tolerance for bad news in good times, and a complete intolerance for self-imposed discipline particularly where it implies any sort of pain. It’s time to consider what all of this will combine to create in the coming years, if you haven’t done the math already. People are talking about 2016 like that represents some sort of panacea, but ladies and gentlemen, our nation may not make it until 2016.
Editor’s note: I realize that the linked reports from John Williams’ site constitute a fair bit of reading, but like most issues, the devils lie in the details. Understanding the roots of our impending calamity, and the historical precedents as well as the actual manipulations of statistics by the current regime are critical in understanding what is afoot. While it’s a lot of reading, it’s entirely worthwhile.
Note 2: There was an error in the links to the two 2014 reports. These have been fixed.
Long time readers will know that I am a fan of Ayn Rand’s greatest work of fiction, Atlas Shrugged, first published in 1957. The famed novel has developed a following over the years because it describes a frighteningly similar world in which the global economy has collapsed, while America remains as the last enclave of a free market, also on its way to collapse under the dogmatic application of the statist doctrine of mass sacrifice. Through the novel, readers are transported to a world in which the news media has become a lapdog for the statists, economic news is contrived and rigged to hide the onrushing collapse, while most people go about their lives with self-constructed blinders by which they are able to permit themselves not to know or even notice the facts of their increasingly dire situation. Rand never intended the book to be prophetic, and yet with each passing day, the global economy and the financial markets provide daily reminders of her fictional work. Economic conditions have grown steadily more awful, and yet we find the media is unwilling to show the American people more than a glimpse of the truth confronting them. It’s as though Rand’s fifty-five year-old novel is being acted out in real life, in a modern setting wherein the technology has changed, but acts merely as another shady disguise behind which to conceal the operative laws of nature. It now appears that Atlas is finally Shrugging.
Government has become an enormous bully, not concerned with improving the economic conditions, but instead with concealing them, and companies across the nation have been forced to collaborate in the deceit. Consider the case of Comcast. The company announced on Tuesday that it would be closing all of its California-based call centers, reducing their number nationwide from thirteen to ten. The original announcement mentioned that the reason the California centers were being closed was due to the extraordinarily high cost of doing business in that state. According to the Mercury News, Comcast spokesman Andrew Johnson said:
“We have concluded that the cost of doing business makes operations in California expensive and very difficult”
Scott Anderson, the chief economist with Bank of the West is quoted in the same article:
“The cost of doing business in California is a well-known problem across the country and among business owners in the United States. With the fiscal problems in California, these expenses will likely get higher. Tax rates may rise in California.”
As bad as that may be on its surface, the truth is far worse. After pressure from the state’s Senate President Pro Tempore, Darrell Steinberg(D-Sacramento,) Comcast withdrew its earlier announcement, backing away from a statement that made clear the cause of the decision for the California closures. From the Belleville News Democrat:
“Instead, it said the California closures were needed for cost efficiencies and to consolidate its Western call centers from 13 to 10, based on customer needs, “rather than geography.” It noted that many customers rely on self-help and online tools to handle their service questions, which meant it doesn’t need as many call centers as in the past.”
I would direct my readers to consider what follows in the same article:
That turnaround was greeted warmly by the Governor’s Office.
“It is unfortunate that Comcast’s announcement to eliminate jobs in California inaccurately placed blame on the state, but I am pleased to see the executives at Comcast taking responsibility and correcting the statement,” said Mike Rossi, the governor’s senior adviser for jobs and business development, in a statement.
The governor’s involvement came after Steinberg issued a personal invitation to Comcast executives to meet “to outline their issues and discuss what my office and the Legislature might do to resolve their concerns.” Pending a meeting, he urged Comcast executives “to reconsider their actions.”
Steinberg said he was “puzzled and extremely disappointed” that Comcast representatives had not contacted his office, which represents the Natomas area, until after making its public announcement.
This is what the beleaguered people of California have as a state government: A Governor who is more concerned with appearances and blame than with the facts. Notice that Comcast is still going to close the centers, and more than 1,000 California workers are still going to lose their jobs, but the company’s official statements now reflect a more politically acceptable cause for the closures. This is the sort of crime-boss mentality that now pervades government, from the Federal Government all the way down to State and local institutions of government. They are no longer concerned with stopping the bleeding, but instead merely concealing it from your eyes, or in this case, merely causing you to believe they hadn’t been the cause.
Ladies and gentlemen, this is precisely the sort of thing that Rand described in her famous novel, and indeed, she even described a breakdown particularly in California, but she was no prophet, much as some might by now be convinced to the contrary. Rand unflinchingly described the world as it is, and what happens when a people come to believe they have no further need to adhere to the laws of Nature, and that the technologies invented and built by others somehow insulate them the necessity to know the truth, or to somehow evade the objective reality that has been established by the laws of Nature.
As bad as the government and media collusion in this deception may be, what may be more frightening is that as economic conditions worsen, ordinary Americans will become more polarized, divided into two general groups on either side of the gulf described by the bold line of truth: Those who see what is and are no longer willing to conceal it for any cause or contrivance, and those who will avert their eyes lest they be forced to grasp the nature of the horrors their continuing silence will have enabled. It is questionable whether disaster may be averted, but it is certain that if the American people fail to recognize the danger, there can be no avoiding it. It is therefore fitting that as we approach the release date of the second installment of Atlas Shrugged, the movie, and as we watch politicians scramble to avoid blame all while continuing their unrepentant war against us, it’s more important than ever that we refuse to accept the comforting lies they tell. Their attempt to conceal their responsibility in the impending collapse should not serve as our excuse to conceal our own as Rand’s unintended prophecy continues to manifest around us.
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. Note: For those interested, here’s the trailer for the upcoming release of Part II of the movie Atlas Shrugged
I’ve written and re-written this piece a number of times, in part because I don’t wish to cause undo angst, but also in part because I don’t wish to cause too little. You can blame Barack Obama, George W. Bush, Congresses past and present, or Ben Bernanke and his predecessors for all it matters, because in the context and scope of your life, it won’t make much difference. We are headed for a complete collapse, and the collapse is no longer some vague notion in some nebulous, faraway universe of remote possibilities. At least one analyst has concluded that by 2014, at the latest, this country is going to enter a period of economic turmoil that will make the Great Depression of the 1930s look like a garden party. The media won’t tell you this, whether CNN or the New York Times; neither FoxNews nor the Wall Street Journal. We are staring directly at the muzzle of a colossal gun, and it’s aimed at the heads of every American, but neither the current President nor the current Congress will tell you how bad it has become. For two generations or more, the hand-writing has been on the wall, but unlike ordinary ink that will fade with the passage of time, this bit of script has become bolder, heavier and finally, indelible. There will be no avoiding it. There will be no escape. This time, we will go down, and we may well never stage a comeback. The gun is aimed at our heads, and we loaded it.
To understand this will take a little time, although regular readers of this site will know most if not all of the gory details. For a brief primer on what will soon confront us, please take a look at this report on Hyperinflation at John Williams’ Shadow Government Statistics website. It’s lengthy, but it is information every American should learn and know, because while it is a bit of a reading chore, particularly for those whose eyes glaze over at the first hint of economic and financial terminology, it is nevertheless important information, and Williams does a remarkable job of not allowing the material to become overly dry. His report really doesn’t need any dressing-up or embellishment to be terrifying.
If you’ve been paying attention to the news beyond the international developments of the last few days, you will not have missed the fact that today, the US credit rating was again down-graded again by Egan Jones. You should expect this trend to continue for some time, but this downgrade, like the last round of them a little more than one year ago, really doesn’t tell us anything we should not have known: Our currency is on the verge of collapse, and our ability to repay debt is becoming more challenged, but the fools in Washington DC don’t tell you about it because they’re afraid if you knew how bad it really is, you might react badly. In the movies Armageddon and Deep Impact, the governments portrayed did their best to keep their respective impending disasters secret for as long as possible. The thinking was: If it’s inevitable, such that all we can do is make things worse between now and the impact(s) by disclosing it in advance, we should say nothing until the last possible moment. Another way of looking at this is the question I once posited:
“The government is spending like there’s no tomorrow. What if there isn’t?”
The fact is that we don’t need Hollywood or the Mayans to provide apocalyptic scenarios to fulfill this role in our immediate future. Our Federal Reserve(hereafter, simply “the Fed”) in concert with our Federal government have created something nearly as disastrous, and potentially, every bit as deadly. As Ben Bernanke uses his powers as Chairman of the Fed to undertake another round of quantitative easing. As you’ll remember from previous rounds of this same tactic, this amounts to money printing, a way to inject more cash into the market in the attempt to stimulate lending and business activity. The problem is that each time this is done, what actually happens is that the value of the dollar falls versus commodities such as oil, or other energy sources, and the cost of everything increases. When this happens, it makes it harder for business to operate, harder for consumers to spend such cash as they may have, and otherwise has precisely the exact opposite effect, all while driving us closer to the brink. Bernanke is trying to drive us away from a deflationary cycle that could result if the economy stalls too steeply, but the problem is that he’s going to cause what will be infinitely worse.
At the same time, our Congress and our President have added to the problem, because each time they borrow money, the Fed is printing it into existence. In short, both our fiscal and monetary policies are rigged in favor of inflation, and with all the money-printing, it is only a matter of time before the dollar becomes completely worthless in the world market. Any small displacement in the market could lead to our economic demise. Williams’ report for 2012 goes so far as to suggest that you concentrate on bare survival strategies, and defending yourself in the face of complete political and social disintegration.
I know that you’ve been reading about a “financial cliff” somewhere in the distant and murky future, but what I’m telling you to do at this point is that the veil of fog is beginning to lift because that future is no longer distant. Williams’ report explains thoroughly the main causes of our impending doom, and this isn’t some conspiracy nut. When he published this update earlier this year, his warnings sounded eerily like my own, and also those of a few other people who have been sounding the alarm, including some in talk radio, in conservative media, and notably, Governor Palin. At the time of the announcement of QE2, Gov. Palin did a rather bold thing: She announced to the world the dangers and the certain results. Naturally, since her evaluation was based on sound economic understanding, her conclusions might well have seemed prophetic in light of all that has happened since. The truth is that she was merely telling you what must be based on the immutable laws of the universe: There are no free lunches…or anything.
I believe this is one of the reasons the Republican leadership in Congress has done nothing to substantially obstruct President Obama’s agenda. It is true that they would have faced some political consequences, but what’s more the case is that they are every bit as aware of the impending collapse as anybody in the executive branch. One might view Congress cynically, and suppose they are “getting while the getting’s good,” and there’s no doubt that some of that goes on, but it’s also true that the problem is so gargantuan that they do not see how they can correct it without throwing the country into complete chaos, and since that’s what’s coming anyway, they see no point in hurrying the matter.
Some have concluded that Bernanke is taking this up now in order to try to help Obama’s re-election, and while there may be some truth to it, the fact is that the situation has been and remains much worse than you’re being told by the media. We have been in a bottom-bouncing depression since at least 2009, and nothing has animated us very far from the floor. As I have written many times, they stimulate via the printing press and the deficit, and we get a brief improvement, but then the increased costs in the market come home to roost, and we’re set back to a place no better than before as the costs, driven in large measure by the inflationary effects of the stimulus that quickly act as a brake upon the alleged “recovery” that never materializes.
Elsewhere on Williams’ site, you can find a detailed examination of his treatment of unemployment, and the numbers will shock you. Add to this the tidbits about the deficit and inflation, and you will begin to understand how you’ve been misled, not only by the media and the administration, but also by decades of shoulder-shrugging politicians in both parties. By Williams’ assessment, it may be impossible to rescue our nation any longer.
Ladies and gentlemen, I have been urging you since the inception of this blog to make preparations to the best of your abilities. I hope you’ve been diligent. Check out Williams’ Hyperinflation report, and think it through carefully. The evidence of your own daily lives has been telling you all of the happy-talk about “economic recovery” had been a farce. Like the approach of a colossal asteroid, the government’s ability to hide the impending disaster or disguise the seriousness of our worsening situation has begun to fail. That is really the only significant meaning of the latest downgrade. They can’t hide it much longer. The Piper will be paid.
Some are choosing to ignore all of this in the hope that a change of administration might give us one last chance at a way out, but irrespective of the outcome in November, the chances that our currency survives three more years in its current form is probably fewer than one in ten. The possibility that we will survive as a nation may be somewhat less. Fixing this problem will require the institution of spending cuts on a scale that may cause complete social collapse. Do we expect John Boehner to take on such a monumental chore? Even if the Republicans take the Senate, Mitch McConnell isn’t exactly the picture of courageous and vigorous leadership.
Saving our nation is no longer simply a political problem in the sense of replacing certain politicians. It’s a cultural and economic crisis as well, and with all that is going on abroad, it may come down to a matter of literal survival. It’s time that we begin to face up to this, because our politicians aren’t going to address the problem until it no longer matters, at which point, they’ll do nothing, but we’ll pay the price. We always do. People have asked me what we could do to remedy the problem, but when I tell them, they look away, because they don’t want to face the implications that attend the proposed actions.
At present, we have an annual published deficit of around $1.3 Trillion. As Mr. Williams’ report makes plain, if the government were forced to use GAAP(Generally Accepted Accounting Principles) in their accounting, the actual annual deficit is in the neighborhood of $5 Trillion. The added $3.7 Trillion consists of new future obligations that the government does not pay, but has promised at some future date. Many refer to these as the “unfunded liabilities” of our government, but they add up to a staggering amount, in the range of $80 to $120 Trillion dollars in promises. When one makes promises on this scale, it is sure to affect one’s creditworthiness, never mind one’s credit rating.
Consider the fact that our government collects approximately $2.5 Trillion in taxes, fees, and the like throughout the year, but that this is still well short of the $3.8 Trillion it spends, and then propose cuts in response. Here’s a dirty, ugly secret the DC crowd won’t point out to you: If you cut everything that is not an entitlement program or debt service, you would still have a deficit. That’s right, if you eliminated every bureaucrat, soldier, judge, roads project, education expenditure, and all of the other things that government does apart from pay interest on its debt or send payments to individuals through entitlement programs, you could not balance the budget.
What this makes clear is that the problem exists not on the “discretionary” line of the ledger, but entirely on the “non-discretionary” lines in the book. Leftists will argue that the problem is the lack of revenues, but that’s an absurd hoax. Anything done to increase revenues at this point will actually cause them to decline. Increased tax rates? People will earn less to avoid the taxes. Even those who want to earn more won’t be able to because there will be insufficient demand in the marketplace to provide the commerce needed to generate the revenues we have now.
The only answer to this problem is sharp cuts in government spending, combined with a cessation of Quantitative Easing. The entitlement programs have become such a massive anchor on our economy that it cannot recover, and they have squeezed out all other spending. This is why people look away when you explain to them the problem. They know what it implies about all of our sacred cows in the entitlement sector of government. As with the old lament, everybody is in favor of massive government cuts until we arrive at their favorite Federal program. At that point, you are given a stack of excuses, complaints, and ultimately: “Never mind.”
I have news for you, and it’s not pleasant: These programs will end. Virtually all of them. None of them will survive in their current form, if at all. We are like Greece, only worse, and much larger. The question our elected leaders have not faced is whether to break the news to us now, while there is some small hope of recovery, or whether they shall just “get while the getting’s good,” and make off in the dark of night after the collapse, leaving us to figure it out. The fact is that I can’t blame them for opting toward the latter, because we will be worse than Greece in every dimension and measure, both in size, but also in degree, and I believe when a responsible politician ever tells this truth, he will be pilloried, at first in media, and then later by mobs. Paul Ryan has had just the first taste of this. Sarah Palin was mocked for such warnings to an extent I’ve never seen for simply stating the dangers of QE2 and all the money-printing. She was right, naturally, as is Paul Ryan on the matter of entitlements.
The problem is now that it may be too late for any sort of remediation. The problem has become too vast, and it is as late as that. What we can do as individuals is to grasp the reality laid out before us. We can prepare ourselves and our families. We can vote accordingly. We can make noise about it. In the end, we may be forced to watch our nation slide back into the pre-industrial, pre-republican muck from which it emerged. It’s been a long decline, and we’ve mostly done little but to urge it on as a people. We’re peering down the loaded barrel, and it’s been our finger’s twitch upon which we are waiting.
Over the life of this blog, one of the subjects that has arisen repeatedly is our energy problem, and the effects Obama’s policies are having on our nation’s economic condition. I have offered you charts, graphs, economic theory, and an understanding of why we remain in the economic trouble we’re in, and much of our troubles originate with energy concerns. Again validating what I’ve previously reported, global oil prices are now falling in response to the economic outlook in the US and in Europe. The reason I again bring this to your attention is not to thump my chest, since there’s nothing revolutionary in what I’ve argued, but instead to reinforce the point, because in the broader media, there are too many sources interested in obfuscating and otherwise muddling the matter. To have a growing, vital economy, the US has relied historically on inexpensive energy.
The American economy is a vehicle of vast capacity for growth, and the American people remain its vital engine, both as consumers and producers. What the Obama policies have done is to choke down this engine, and the result is an economy that is bottom-bouncing at an idle, struggling for air that a reckless government policy forbids it to consume. Every time the American people start to accelerate, the market effects of the regressive policies of our government govern the capacity of our economy like a vast engine choke. You could rightly call the policies of Barack Obama the “stuck choke” of American economics.
An engine makes a great analog for the state of our economy, because an engine must both consume energy, and convert it into motive power. In a healthy state, that’s what the US economy does, and it’s why we must not ignore the grave costs of the current Obama policies. Consider what happens when you step on the gas in your car: The throttle opens up, allowing the engine to draw more of the air-fuel mixture, permitting the engine to accelerate, reciprocating more rapidly, and those converting the energy to the horsepower needed to make the vehicle go. This is how our economy functions: It’s demand for consumption increases, and we have traditionally answered it by permitting more air-fuel mix(energy and capital) into the engine, and it accelerates(grows) providing output some of which is reintroduced back into the stream going in. It’s a marvelous thing, and the prosperity of every American increases on average.
The situation we’ve been placed in by the Obama policies, combined with the inflationary policies of the Federal Reserve is that the air-fuel mix becomes prohibitively expensive. Imagine driving down the road at 30mph in order to conserve fuel. You could come up to speed, but because fuel is so expensive, you really can’t afford to put your foot in it, so instead, you patiently move along at a snail’s pace because you’re trying to do the minimum consumption you can manage and still get to your destination. This is what happens each and every time the economic engine gets going these last several years: The price of fuel begins to tick rapidly upward, we get a price spike, and everybody goes into conservation mode, and as a result, the economy slows down. Naturally, as soon as the economy slows, the prices for fuel begin to fall again, and one can expect that at around the time they hit the bottom of the trough, people will begin to feel safe accelerating their cars back up to highway speeds, and the process begins once more.
The slippage in oil prices this week constitute a warning, because what it implies is that you’ve already hit that point of conservation. Of course, it’s not merely consumers, but businesses and every form of productive endeavor that uses energy, which is of course all of them. In that environment of rationing, what occurs is that people necessarily become more frugal, but so do businesses. It’s unavoidable. You can only afford to spend so much of your capital on energy, because you must still pay for all of the other necessities of living, and the United States has been operating very close to this line for several years. A rational Federal policy would realize that this is a supply-side problem, and that to alleviate the problem, what we must do is increase the supply of energy available to the market, but our government has instead answered with tepid notions about conservation, and highly speculative and fanciful programs for “green energy” while it chokes off the supply of real energy to the market.
This is our situation, and the current drop in oil prices is a result of the fact that our economy is again on the downside, and that is further substantiated by the poor numbers of jobs being created. At this point, it should be so obvious to every living person with two brain cells remaining to clack together that there ought to be a national movement to remove any politician who isn’t focused on this problem. Instead, we have an administration that is dithering, and is actually making things substantially worse through its regulatory paradigm that insists America simply do more with less. This insane, nearly maniacal policy is impossible to sustain, because it is driving us to the poor-house, and yet the radical left is fine with that outcome. They want to make us poorer, and the reason is clear: Poor people who must choose between groceries and gasoline are easily managed by a central authority, and they are only too willing to do the “managing.”
Let us place this in context: Imagine that you have a home that is all electric. Many Americans do. Imagine that the power grid that supplies electricity to your home generates that power with coal, oil, and nuclear processes. You might also have a little hydroelectric power, or a little wind and solar, but on average, those supply only a small fraction of our power generation. Remembering that oil derivatives are one of the primary fuels used in power generation, what happens if we take away one of the others, like coal? Coal currently provides half of our electric generation, nationwide. What happens to the price of oil and all its derivatives, including the gasoline or diesel for your vehicle when coal is taken away from power generation? The answer is obvious, and so is the result, because we’re living it.
Understanding the relationship between energy and our economic prospects is key to understanding our current economic malaise, and the impending disaster we face if our policy is not soon changed to promote more energy production, and to unshackle energy producers from the chains that prevent them from providing to the market the energy that a growing economy requires in order to sustain itself in that state. This is why Newt Gingrich’s idea of $2.50/gallon gasoline was important, and it’s also one more reason so many of us had hoped that we would see a Sarah Palin candidacy, because she understands, perhaps better than any other politician in the country, how thorough is our reliance upon energy, but also how to best develop the resources we already have at our disposal. We desperately need an “energy President,” who understands that growth and prosperity are only possible with abundant and inexpensive energy, permitting the American people to do what they already know how to do, and want to do: Build, grow, and prosper.
The proof of this thesis is contained in our cycle of boom-spike-conserve-bottom. When energy prices fall, the economy (and the American people who drive it) respond with jobs, growth, and productivity. The problem is that in our current environment of government regulation and governmentally-induced inflation, when the growth begins, the price of energy begins to immediately climb upward, eventually spiking to unsustainable costs. This places the entire economy into conservation mode, and very rapidly, we slide to the bottom again. It’s no longer a matter of proving the theory. It’s proven, and the evidence is all around us, but until we make the conscious decision to end the misery, we’re stuck.
I seldom watch Bill O’Reilly, because if I want to listen to somebody pontificate on subjects about which s/he knows little, I can simply re-run Joe Biden’s most recent speech…in any time-frame. Thursday evening, O’Reilly was on when I came through the door, but since he seemed to be talking sensibly about the Fluke Fiasco, I listened briefly with interest, but in the very next segment, he went on to discuss the price of oil, demonstrating he’s at least as ignorant as Barack Obama pretends to be on the subject. Part of it is driven by the fact that O’Reilly is a panderer who tries to placate ‘the folks’ while serving his masters in the establishment. His oft-mentioned Harvard degree clearly isn’t in economics. As usual, O’Reilly failed to identify the actual causes of the high energy prices accurately.
Naturally, being a panderer, he talked about “speculators,” but he failed to mention even one valid reason that makes up the bulk of the increased prices we’re experiencing at the pumps. Since O’Reilly did such a masterfully incompetent job of explaining the issue, I feel duty-bound to correct the record, or at least explain it. There are really five major factors controlling the prices you pay at the pump, and while speculation might be a distant sixth in importance, it really has little to do with what you pay most of the time. Rather than lead you in circles of pompous pandering, let me try to make it a good deal more clear.
By far, the biggest factor in the price of the fuel you buy at the pumps is the price of crude oil itself. As the amount of oil being supplied to the market contracts, or the quantity of oil being demanded increases, you can expect a corresponding movement in the price you pay. When producers get together as a cartel(OPEC) in an attempt to restrict production, this will necessarily constrain the supply, and you will generally see higher prices, unless you have some manner by which to throw a significant monkey-wrench in the mechanism, for instance being able to increase your own domestic production, or by augmenting the supply to the market from a reserve. This should seem simple enough to most people who studied basic economics in High School, never mind earning a degree from that institution of fame we might call “Hahvaad.” The available supply versus the quantity demanded will always dominate the basic calculation.
Another factor that is nearly as important to consumers in a given country is the relative value of their currency in the world oil markets. The US has enjoyed the distinction of possessing what had been (and still remains, barely) the world’s reserve currency and the currency in which oil trades are made. Unfortunately, as our Federal Reserve has printed more dollars out of thin air in order to bail out the banks, and Europe, but also loan to our Federal Government to feed it’s insatiable hunger for dollars, we have seen the value of our dollar fall dramatically in the last few years. This means that no matter what commodity you buy, it will take more dollars to buy one unit as compared to before. In late 2010, when the Federal Reserve announced QE2(Quantitative Easing, Round2 – a.k.a printing vast sums of cash,) Sarah Palin, the former Alaska Governor, took to the podium to warn Americans that all of this money-printing by the Fed would result in higher food and energy prices.
Some people, mostly jerks like Paul Krugman of the New York Times actually mocked the Governor for that prediction, and even Fed Chairman Ben Bernanke got in on the act. After all, what would a former governor of Alaska know about it? As you probably know by now, she was right on every count. Everything she said came to pass with respect to the inflationary effects of “Quantitative Easing.” Score another one for the lady who knows how to take down an elk, but also a pompous commentator. She understands the energy markets, meaning she knew how the monetary policy of the Federal Reserve and the unrestrained borrowing of the Federal government would wind up effecting the general economy, but particularly the energy sector.
The next thing that affects the price of oil is the availability of substitutes. For instance, a fair amount of the electricity generated in the US comes from petroleum distillates and residual products from the refining process. There are just a few commercial alternatives, and apart from nuclear power, the vast bulk are fossil fuels, including oil, but also natural gas and coal. The grand total of wind and solar energy production nationwide doesn’t provide what one nuclear plant does, so let’s call that source negligible in any commercial sense. Coal accounted for more than half of all electric generation in the US prior to Obama’s arrival in Washington, but due to regulations being slapped on the energy producers, coal-fired plants are rapidly going extinct. As this happens, plants that use other fuels are necessarily being forced to pick up the slack, running at closer to 100% capability, and some of those plants use…oil and its byproducts. So you see, as you reduce the use of substitutes, it necessarily will cause an increase in the price of oil. Like in any market where substitutes are available, the reduction of the availability(or use) of one will cause a corresponding increase in reliance upon another. If beef prices go up, before long, people will shift to pork and chicken, and then the prices of these substitutes will move up also.
The fourth big factor affecting the price of fuel at the pumps is government taxation. If you live in a state like mine, where we pay a federal and state excise tax by the gallon, it’s bad enough when the Feds increase the taxes, but if you live in a state where the tax is a percentage, you really get blistered by any upward movement in fuel prices, because not only do you pay more in fuel, but you also pay a good deal more in taxes on it.
There is another factor that comes to mind, and it has to do with the distribution of the product, and how temporary displacements and shortages like we saw in 2005 with Hurricans Katrina and Rita caused trouble depending upon where you were and what the distribution chain that feeds it looks like, but those sorts of problems are a result of what happens when Just In Time inventory management tries to contend with the unexpected that Mother Nature throws our way.
We currently do not find ourselves under that sort of instability in the distribution chain, and this only goes somewhat further in explaining why the fuel price spikes we saw under George W. Bush bear little resemblance to the structural causes of the high prices we face today. Four dollars for a gallon of gasoline may not be entirely new, but resulting from something other than an ongoing distribution chain problem as a result of natural disaster, it is most certainly unprecedented in the 21st century. Today’s closest analog occurred under the administration of Jimmy Carter, if that tells you anything.
Together, these five factors have much more to do with the price of fuels than anything Bill O’Reilly mentioned. Speculators play a role, but by the time you add up the five factors I’ve mentioned, what you discover is that while speculators can drive things a little in one direction or the other, most who trade in commodity futures wind up losing, at least according to the statistics. Besides, they are an important part of the market too, and to pretend they have no other function but to somehow cheat consumers is a laughable bit of Marxist theory often pushed by panderers in both parties. Realize that listening to economic analysis from Bill O’Reilly is roughly analogous to getting investment advice from a fortune cookie: It contains only meaningless platitudes that will gain you little more than a moment’s amusement, but will reveal no cosmic truths.
Barack Obama has been on the campaign trail mocking Republicans, particularly Newt Gingrich and Sarah Palin(although not by name,) who advocate an energy policy of increasing domestic energy production. This is a bit odd, because while Obama mocks “Drill Baby, Drill,” he has already undertaken policies with the same effect in mind. If increasing the supply can have no effect on prices, as the President claims, why did he order a release from the Strategic Petroleum Reserve late last summer? It’s now rumored that he will soon do so again in response to rising pump prices. Does Barack Obama think we’re idiots? Releasing oil from the SPR merely accomplishes the same thing as producing more oil domestically: It provides more crude oil to the market, and that bump in supply tends to bring prices down over time.
Either Barack Obama doesn’t understand basic economics, or he thinks we’re too stupid to notice the contradiction implicit in the difference between his words and his actions. Here’s what he’s saying:
Notice that he continues the lie about the so-called “hand-outs” to “Big Oil.” You may hear his thesis that “there’s no silver bullet,” but what you must understand is that he fully understands that the silver bullet is supply, and when he has order releases from the SPR, it’s an acknowledgement of the fact that an increase in the supply available to the market is a downward pressure on prices. This is pretty basic, and I assume even President Obama understands that concept, despite frequently demonstrating a a general ignorance of economics. If he knows better, then there must be a reason he’s misstating the facts in this case, and there is: He’s in political hot water over the issue, and he knows it.
This is his attempt to stave off criticisms over escalating fuel prices, but it’s not going to work when the electorate realizes that in other ways, Obama is working to constrict the supply of oil available to the United States. On Thursday, even Mitch McConnell seemed to get it, and from the well of the Senate, he pointed out that Barack Obama is still obstructing the Keystone XL pipeline, and all of the jobs it would create, and the effect it would have on pump prices domestically:
This is a plain debunking of Barack Obama’s thesis, and Obama knows it. You can’t expect fuel prices to come down so long as you’re restricting the growth of exploration and development of new productive fields. Why does Saudi Arabia, in particular, but OPEC in particular regulate its production? The answer is obvious: To prop up the prices oil brings in the market. They intentionally restrict supply, and what increased production of domestic oil resources will do is to take away the ability of Saudi Arabia and other OPEC nations to effectively dominate the question of global supply delivered to the market. Doing so will begin to have an immediate effect, as the oil market, like any other sees dramatic moves on the basis of even small marginal changes in the quantity supplied relative to demand.
Obama can’t talk his way out of this one, and worse, he’s been caught lying. You can’t legitimately claim that to increase supply won’t effect prices while having undertaken measures to artificially prop up supply in order to drive down prices. This is the nature of Barack Obama’s dishonesty, and it’s all political. I leave you with this:
This is a question leftists are now asking in response to the fact that Barack Obama’s policies have resulted in the most expensive February gasoline prices we’ve ever known. Rather than treating it as an economic question, they tend to discuss it as a matter of politics, and mostly as a matter of damage control. Newt Gingrich is promising that if he is elected, he will work to reduce the price of gasoline to less than $2.50 per gallon, but what the liberals contend is that such a reduction isn’t possible, but more importantly, even if it were feasible, it’s not desirable. Let me make it perfectly clear for those of you who have questions about this issue, because it’s something we should examine in looking at the potential nominees: Newt Gingrich’s intention to reduce fuel prices to sustainably lower levels is an important national initiative in which government can play a role, and it offers a chance to boost the US economy in a way that nothing Obama has done will ever accomplish.
In previous articles, I’ve discussed with readers the important relationship between economic growth and the price of energy. By taking note of this fact, and addressing the issue in his campaign, Gingrich has signaled that he’s more in touch with the economic problem with which our nation is now confronted. Over the last dozen years, nothing has had a greater influence on economic prospects than the cost of fuels. Not financial market collapses. Not terrorist attacks. Not government spending. If you want to view the track of economic growth, all of those things have had short-run effects, but nothing undermines the economy more thoroughly than increases in the cost of energy. The reasons should be obvious under even superficial examination.
Everything humans do requires energy. Recognizing this fact is critical to economics, because as energy costs increase, there is a direct effect on the cost of all other commodities, and all other services. There are no exceptions to this fundamental, structural fact of life. More, since some items require much more energy to produce, and consume more energy along the entire chain from raw material to distribution, any increase in energy costs quickly ripples through the market. As such, this creates a drag on production, but also consumption, since energy needs tend to come first in one’s priorities. If you’re an employee, you must travel to and from work. This is something most employees share as an expense from which there are few option in relief.
For that employee, his or her pay is not likely to react to his or her costs. This fact means that at energy prices increase, the people who will feel it hardest are those who must engage in commerce, but whose compensation is least elastic with respect to the costs they must absorb. Most businesses can react by adjusting prices, although the competition they face places pressure on them to delay passing along costs to customers as long as possible. This was evident in the trucking industry and more broadly throughout the transportation sector when fuel prices first exceeded the three dollar mark a few years ago. This gave rise to a new phenomenon called the “fuel surcharge,” and it was intended to show that they weren’t simply jacking up prices without justification, but instead that their costs had dramatically increased. The point of all this is that there is no way to avoid the fact that for most people, and most businesses, you can’t easily augment your income simply because your costs have risen.
This being the case, there will be choices to be made, and all of those involved will need to decide which of their ordinary expenditures may have to be curtailed. New projects and investments are delayed, and necessary repairs or upgrades are put off indefinitely. What this means is that economic activity is curtailed, and therefore, fewer jobs are created, and thus unemployment rises. As this happens, it feeds back on itself because when unemployment is high, the average employee’s negotiating power on wages diminishes, and this makes the average person even less able to spend money on all of those things that create increased economic growth.
After a time, if this continues, the quantity of fuels demanded will begin to contract, and this will lead to the prices falling again, but there is a lag until economic activity recovers. Clearly, if this is the cycle, then what we should see is precisely what we have seen over the last few years: An economy that fails to launch because just as it begins to heat up, the corresponding increase in energy prices causes a clear diminution of the economic growth. The only way to combat this is to increase our energy resources, and to make safe such resources as we already enjoy.
Back in the 1990s, one of the things from which the American economy benefited was the reliability of OPEC members to undercut one another on production quotas. The quotas were intended to maintain a higher price point, but as prices went upward, one or more member nations would get greedy and cheat on the quotas. This increased the supply in the market, and the prices would inevitably fall. This was in an era when China’s demand in the market was relatively negligible, but since then, their bite out of the production pie has done nothing but increase proportionally to all others. It was also an era when OPEC was more fractious, and most of their members couldn’t coordinate on much of anything for long.
What Gingrich recognizes is that our economy cannot function properly, and in a healthy way without the energy we need at a price we can afford while still building economic activity, buttressing the points made by former Alaska Governor Sarah Palin. His stated goal of seeing a reduction in gasoline prices is the right thing to do, and he recognizes that it’s not just a matter of reducing the price to that point for a day or a week, but in making that the effective ceiling even as the economy roars back to health. That will require that we develop new sources of energy, and not just empty promises of “green energy.” President Obama can mock “Drill baby, drill” if he likes, but the truth is that developing domestic oil resources is critical to getting this economy moving in a sustained way. In short, we can’t merely increase the temporary supply on a short term basis, but must increase it in a structural sense: We need more wells, we need more oil-fields in production, and we need to develop other alternatives simultaneously.
This flies in the face of what leftists want and believe. They believe the ultimate goal should be to reduce consumption, but the only way to do this without eliminating people is to substantially reduce their standard of living. In short, their plans demand we return to a pre-industrial state where most people do not consume much energy. Wave goodbye to your electronics, your hobbies, and your lifestyles if these lunatics get their way. There’s no way to have what they seem to promise, and they know it. There is no rational way to grow or even sustain an economy while cutting the use of energy in any dramatic fashion. Can efficiencies be found? Absolutely! Can they be created by dictate or order? Absolutely not!
This is the difference in the position between Barack Obama and somebody like Newt Gingrich who actually recognizes that wishes are not the same as facts, and that nature is not to be cheated. You cannot build a modern, technologically advanced culture with prosperous people and a growth-based ethos when governmental policies are mandating a reduction of energy consumption. Nature doesn’t respond to arbitrary wishes, and yet that is the stance of the leftist, who thinks a government mandate can overwhelm the forces of nature and the rules of physics. The disparity in the two positions demonstrates their relative fitness to the presidency, and by no measure is Obama suitable to his office. Whether Gingrich is qualified remains a question to be answered, but on the matter of his understanding of the critical importance of energy, it’s clear he passes the test. We can have inexpensive fuel again, but it will require a comprehensive effort by the President and Congress to remove obstructions to the growth of the energy sector that is so vital to our future.
Most have noted with disgust the rising price of fuel. In most places around the country, the price per gallon of regular unleaded is creeping up on $4.00. There has been some talk about an improving economy, but that’s mostly fluff. The truth is that our economy is in miserable condition, and as I’ve previously reported, the price of energy has the most immediate deleterious effect on our growth. As you look at the numbers for housing starts, as fuel ratchets up over $3.50, it begins to retard growth and investment. This happens because it affects every stop along the production chain, from the raw materials to final distribution, delivery or retail sales. Now that the price of fuels is driving markedly upward again, it is important to note the causes. The first is the inflationary policies of our government, and the second is a whole host of worries over the world supply of oil, now threatened by an increasingly hostile and vociferous Iran. These two factors threaten to drive prices over six dollars by summer’s end.
This would collapse our economy completely, and the only thing leveraging against it is that as prices soar, more projects will be canceled, and new construction will not commence, leading to a balancing reduction in demand. This natural signaling would not be so bad if it weren’t for the fact that our economy is already flat-lined. Anything that would cause a serious price spike at this juncture would likely ruin our economy for the immediate future, and might even push us off the economic cliff.
At present, the Obama administration is claiming unemployment numbers that are plainly rigged. What they have done is to discount people who have expended their unemployment benefits, but who still have no job, and they consider them to have disappeared from the job market. More, they’re started lop off people who have attained a certain age, and now consider them retired, thus removing them from the work force. In short, they’re rigging the outcome of the quotient by reducing the number of people in the job market in statistics only, as many of the people they have excluded are still actively seeking work.
If the current rise in energy prices continues, it will put a downward pressure on economic activity. As we’ve seen in each previous instance when this administration has claimed the economy was in recovery, the rise in fuel prices will tend to knock down the recovery. An economy cannot grow with a shrinking pool of energy resources, and this president knows it, or should. This is why such actions as the denial of the construction of the Keystone XL Pipeline was so astonishing. The construction alone would have provided tens of thousands of jobs with decent wages, and it wouldn’t have been very long before we would be receiving the Canadian oil at the distant end, proposed to have terminated in Texas, in the refining centers along the Gulf Coast.
The presumably short-sighted thinking of this administration is so baffling that many have begun to conclude this is all by design. What is clear is that we will not truly begin a recovery until energy prices are brought down by the government standing aside as the primary obstacle to energy development. The federal government under this president has been pushing various “green jobs” initiatives that promise much, but have delivered very little, either in the way of job, or in the production of energy. The scale of the problem is gargantuan, and no collection of windmills or solar panels is going to do much about it, but worse, since these are still not economically viable models, they actually waste money.
The immediate future of American energy production is weak, because we have a president hostile to the various forms of energy most Americans for the near-term future will employ, in the forms of coal, gas, and oil. The problem is that these still represent the bulk of American energy production, with coal-fired power plants still accounting for at least half of all electric generation in the country. Worst of all, Obama’s EPA is shutting down coal-fired plants, as three more plants are scheduled to be shut down this year in Texas. Texas may see a summer of rolling black-outs that will have been the product of these mandates, and there is no way to build an economic recovery in that environment.
Be prepared to see fuels to continue their uphill climb through the spring, and as they do, you will see a repeat of the pattern we have seen numerous times over the last four years. As energy prices increase, any alleged recovery will falter. It’s the unavoidable result of a policy that has set us up for repeated failure. With the monetary problems in Europe, however, it threatens to be much worse.
Here’s another web ad by somebody who truly dislikes Mitt Romney. It’s a scathing hit-piece on Romney’s flip-floppery and the author promises more in the series. It’s a little lengthy, but the video focuses on economics, taxes, and his record as Governor of Massachusetts, which is the correct place to begin. This video makes the case strongly for why Mitt Romney simply isn’t conservative enough to lead the United States out of its current troubles.
I am certain that we have all heard at least one-dozen times or more how Mitt Romney’s private sector experience will pay off in cleaning up government. It’s the thing he stresses relentlessly, and his campaign generally can’t wait to get to that subject. Naturally, any candidate will seek to push his virtues, and downplay his weaknesses, and so it is with Romney or any of the other candidates in this race for the GOP nomination. As discerning voters, however, it is incumbent upon us to examine their complete records, and not simply cherry-pick which parts we like or dislike. We must consider the bad with the good, and part of this process includes deciding what parts of their records are relevant. The Romney campaign loves to talk about his business experience, but during this primary, they’re mostly avoiding his record as Governor of Massachusetts, and this is an important sleight-of-hand we ought not overlook, because it is the relevant part of his record that will be most important in this election.
We all like to imagine that if we could somehow bring the work ethic of the private sector to government, we could some how improve its efficiency. This stems in large measure from our natural observations of how wasteful our government is with abundant resources we provide it, that still never seem to be enough. Who among us wouldn’t like to see government become more efficient in this regard? Four-hundred dollar hammers and six-hundred dollar toilet seats are just two of the historical examples we can identify in an endless sea of waste. Unfortunately, however, businesses waste money too, and in many of the same ways. Walmart wastes tens of millions in accepted returns they ought not to have permitted, because it’s easier than making a scene. Taking back six-months used shoes on the basis that “they don’t fit quite right” is probably a sure way to eventually hurt your business. Of course, businesses do things far more wasteful than this, but my point to you is merely that business is only presumed to be less wasteful in most respects, but in the facts, it isn’t always this way.
Another problem is that government really doesn’t function like business, and you wouldn’t want it to do so. In business, there is a profit and pay-seeking motive that militates in the direction of preserving capital, and that motive generally works to make the company stronger. In contrast, government turns no profit, and you wouldn’t want it to seek one. If so, it would stop making medicare payments and simply cut off social security. After all, there’s no profit in those programs. “Death Panels,” anyone?
Consider your own local government, and how often its policing seems more thoroughly motivated by writing traffic tickets in the name of revenue than in apprehending criminals who are rampaging through your streets, committing theft and burglary and other property crimes. They would expend a good deal of money investigating such crimes but they wouldn’t generate any revenue. On the other hand, writing speeding tickets is relatively easier work, and it brings in revenues to cash-strapped municipalities and their courts. Do you really want your police motivated by the profitability of their particular crime-fighting?
Realizing that government doesn’t and shouldn’t seek profits, it is therefore much more important to consider Governor Romney’s experiences in that capacity. When he ran a state, what was his record, and how did he perform in that office? Did he cut spending, or expand it? By any measure of which I am aware, it must be the latter, as his health-care program alone is costing the state of Massachusetts a fortune it does not have. In business, it would be normal to expand operations to provide new products or services, but is that what government should do? At least 65% of Americans don’t want their federal government taking over health insurance, but we’re well on our way to having done so with Obamacare. Yet this is precisely what Romney did in his own state.
Another important difference between government and business is that business is forbidden a captive clientele. If it doesn’t serve you to your satisfaction, you need only find one of its competitors. This competitive nature in free markets tends toward keeping businesses more honest. Obviously, government has no such restrictions or competition. The closest we get to that is the differences between the local, state and federal levels, but in recent decades, the federal government has all but erased the differences. What had once been the best check against overpowering government authority is mostly gone, and in its place, a network of co-dependent and cooperating layer-cake of government that simply acts without reference to any constitutional restraints. There is no longer any healthy competition, but instead mere delegation among the levels. In this sense, government has taken on a corporate structure.
So where does Mitt Romney’s private sector experience fit into this picture? At Bain, or any other company, the CEO effectively acts day to day as a dictator of sorts. Of course, that’s natural enough, much as in your own castle, you are King. The problem comes in when you take this theory over to government, and find that you are not and must not be a dictator in that office. You have a Congress to contend with, and courts that will countermand your dictates from time to time, and the response we’ve seen from Obama is probably not unlike that which Romney would offer: “How can I circumvent these constitutional checks on my directives?”
When he was governor of Massachusetts, he implemented programs without input from that state’s legislative branch, for instance in the area of environmental concerns and regulation. This hints strongly that in the most important ways, he is likely to make the same sort of power-plays as Obama. Do you want who is merely another anti-constitutional politician with an “R” next to his name rather than a “D?”
When we view Romney’s records, it isn’t his alleged “job creation” we should examine, because that has very few applications in government, except as Obama has practiced them, whereby he merely created new departments and staffed them, calling this “job creation” while you and I are now left to pay for these too. Remembering that the growth of a business is constrained only by its revenues in many cases, what sort of business would it be that had revenues as large as it could dictate at gunpoint?
I don’t think we need a businessman for President, but instead a statesman who understands the real nature of government, and what its limits ought to be. I don’t think anything in Mitt Romney’s resume demonstrates that sort of suitability, and obscuring this fact won’t make our government any better, and threatens only to make it worse.
Many of us wonder how it is that people who ought to have known better can possibly bring themselves to vote for the statists who are undermining the country. Much like when the Titanic went down one-hundred years ago this coming tax-day, the elite are boarding the life-boats ahead of all the rest of us second-class and cargo-hold passengers. Another of the rich and famous is making his plans for exit to New Zealand, as this time Hollywood director James Cameron is looking to get out of Dodge. This should clear up the seeming contradiction, and just as I have told you that the elite don’t fear Obamacare as you must, if you love your life, for the same reasons, these same people don’t fear the collapse of the United States. They’ll simply get themselves to the front of the line for the lifeboats, as America hits the last in a string of icebergs and heads to the bottom.
Don’t worry! They love you! They have compassion for you. It’s just that, well, they don’t want their necks stretched when the rioting begins, so they’re going to get the hell out, which is an option that won’t be open to you. No, you won’t be able to liquidate your assets and pull out for safer harbor, because after all, in a collapsing economy with a crumbling currency, to whom will you sell your homes and your chattel, and in the world in which you’ll be selling it, what do you suppose it will be worth?
No, these elites can come up with all the excuses under the sun, but their actions speak louder than their words. It’s about to get exceedingly ugly, and as they lock you down in the cargo hold, singing the praises of the captain of our stricken ship of state, we’re stuck. They’ve made this mess, and now it will be we who will pay for it. Don’t worry too much, however, because we’re safe until we see them actually flee for their faraway havens. At that point, we’ll know. You shouldn’t fail to prepare as best you can.
Something is wrong with Mitt Romney, and it’s fundamental to his understanding of capitalism. Here we have a man who governed what is arguably the most liberal state in the union, and he surely didn’t do so as a conservative, but now he’s demonstrating why liberal Republicans like him cannot win, and it comes down to the simplest of economics. Thursday, Mitt Romney explained how he would index the minimum wage to automatically keep pace with inflation, proving that he has no Main street experience, but worse, that his alleged business sense is more about making deals than understanding economics. Mitt Romney is no conservative, and by this pronouncement, we now know that neither is he a capitalist.
While it may appeal to some of the more ignorant in the electorate, and to the leftist intelligentsia, the simple truth is that a conservative who understands capitalism would be talking about eliminating the minimum wage laws. Proving his expressions of Wednesday were statements of his true beliefs – that he is “not concerned about the very poor” – Romney advocates a system of wage controls that is economically inefficient, and immoral, but most importantly, in the context of his remarks Wednesday, actually disadvantages the poor, condemning them to perpetual poverty. Before you break out the torches and pitchforks to occupy my front porch in anger, let me explain to you the truth of the matter, and why it is that a minimum wage actually punishes the poor, but setting up a system to perpetually raise it guarantees increased unemployment and corresponding poverty.
In a free market unhampered by government mandates, wages are determined by negotiations between employers and employees. That which sets the price is their mutual agreement to mutual advantage: Each believes he is getting the better of the deal. In fact, in a free market, this is how all exchange is characterized, and it is the best determining factor available, because everybody walks away happy provided that the conditions on both sides of the deal are satisfied. This requires no government involvement, and it requires no government coercion. More, it is morally correct because it permits each party choice.
You might argue that the employer always wins, since he controls the purse strings. I contend that this is not so, and cannot be, so long as men are free to choose. If an employer makes unreasonable offers in payment for labor, he will be refused, and refused again, and this acts as the market’s signal to him. If he does not respond, the labor will go undone, and he will lose the profit he might have made. Since he is doubtless working for a customer, the impetus will be to complete the job to satisfy the deal he’s made with somebody else, and eventually, he will raise the wage he’s offering to get sufficient labor to fulfill his customer’s demand.
You might say “but he will only raise it enough to get a warm body,” and this could happen, but if it does, it may cost him more in the long run, because the labor will be poorly done, and perhaps have need to be re-done, or it might not be completed on time, or some variation on this general theme. This too will act as a signal that higher wages are needed, and the under-performing employee will be dismissed and a higher wage paid to his replacement. Notice that in this whole process, nobody has been coerced. This is the moral superiority of the free market.
What Mitt Romney and the statist, anti-capitalist phalanx demands is a short-circuiting of this natural process. What he contends more than anything is that you should not have the right to negotiate your own contracts in labor at a price you are willing to pay, or a wage you are willing to accept. Imagine Newt Gingrich’s example of the kids who are paid a trivial wage for trivial chores at a school rather than to a full-time janitor at a much-inflated union wage. That sort of thing mustn’t be ignored, because the janitor who is likely over-paid by the education bureaucracy in many jurisdictions probably produces less actual labor than the aggregate labor of the squad of wage-seeking children would accomplish in the same period.
Once upon a time, in a universe far away, as a young teenager, I got my father to co-sign with me on a contract. It was my first crack at entrepreneurship, and it was with the local home-owners’ association to mow grass around the facilities made available to the residents by annual subscription fee. Basketball courts, tennis courts, a baseball diamond, and a swimming pool, along with a fishing pond were all surrounded by acres of grass. The bids were solicited on a per-cutting basis, with the President of the association to monitor and decide the frequency of the cuttings. I came in at a bid that was a gold-mine to me, but far below any competitors.
Doing the math on how many hours it took me to complete a cutting, it was clear I was beneath the minimum wage even in that day. Had they been forced to pay the minimum wage on an hourly basis, I would not have been able to compete, but because it was a per-job basis, I was able to bid what I thought was the minimum I could accept for my time. I won the bidding, and that year I cut grass as my legs and arms and back muscles grew stronger under the beating sun. Mitt Romney wouldn’t understand this by any measure, but applying the minimum wage to that situation would have driven me out, because if you have to pay a minimum wage, who’s going to hire a fourteen year old rather than an adult? One of the few virtues I had to offer apart from my eagerness had been that my low price allowed them to take a risk that at a higher price they could not have taken.
Under a minimum wage, the employee isn’t permitted to accept a lower wage so that the employer will take a risk on an inexperience though perhaps eager worker. This is the flip-side of the argument Frederic Bastiat would have called “that which is not seen.” I don’t believe it is any government’s right to prescribe the upper limit of what I may earn, or the lower limit of what I will accept in payment for my labor. That’s none of government’s business, and they ought to get out of it.
It has been shown repeatedly that a minimum wage increases unemployment by the process of making it too expensive for employers to try out new employees with little or no experience, or to take them on in a capacity to effectively serve as apprentices or trainees, but this is the leg up millions of Americans had used to obtain skills, prove workplace diligence and reliability, and otherwise promote themselves in an act of economic self-efficacy that fueled the growth of our nation.
These facts are well-known to economists, and well-known to all students of capitalism, and yet somewhere along the way, Mitt Romney has managed never to learn them, and I will tell you that it springs from the same place as his desire to “reform and strengthen the safety net:” A sense of collectivized charity rather than the honest desire to promote dignity of people in lifting themselves out of poverty. The Club for Growth has taken on Romney’s suggested auto-indexing of the minimum wage on much the same basis.
The idea that Romney claims to be a capitalist has now been proven false. A capitalist would know that the minimum wage does more damage than good, and that the longterm result is inflationary pressure combined with increased unemployment among the young and the disadvantaged. Frankly, Romney should be ashamed of this pandering, but he needn’t fear because so many people suffer in economic ignorance that his tyrannical, big government idea will be seen as “compassionate” as it sentences more people to perpetual reliance upon the safety net he’s much too willing to strengthen. Romney isn’t a capitalist, or a conservative, and he’s actually no better than Obama, and in some ways worse, because while I expect this sort of thing from a man who is not so ashamed to be tagged as a socialist, it is unforgivable from a man who claims he is not.
As a fellow who is a student of economics, one of my pet peeves is the confusion that often arises when economic concepts are misused out of context to justify political ends. In the discussion and debate leading up to the passage of Obama-care, it was famously noted by Sarah Palin that “death panels” are a feature of that plan. In short, the death panels would make “ethical decisions” based not on what was ethical with respect to individuals, but with respect to what was ethical in choosing on behalf of society at large, i.e, the government. The supporters of the Obama-care program maintained that “there were already death panels” imposed by insurers, and that in any event, rationing would always take place as a matter of economics. In this last point, they were correct in the strictest terms, but they were wrong to compare government actions to the actions of individuals and private businesses in the free market. This is one example of the abuse of economics by politicians, so let us examine it more closely.
In economics, everything is rationed, because it is assumed that there is a basic unlimited demand for all goods and services. Since there exists no infinite supply of anything, it is necessarily true that all things are rationed in some fashion. Gasoline is rationed. It’s happening right this moment. Food is rationed. Housing is rationed. There is no good or service that isn’t rationed, and the primary instrument for determining the allocation of the limited supply in a free market is money. The smaller the supply of a thing, relative to the quantity demanded by the market, the greater will be the price. This is the manner in which everything is rationed: There is a only so much money, and he who possesses enough of it can tap into the limited supply. This form of rationing is natural, or free market-based, meaning that this happens organically with or without formal rules, and always has, even before the notion of money as a medium of exchange had occurred to primitive cultures and barter systems still dominated commerce and trade. Strictly speaking, in economic terms, it is true to say that all things are rationed somehow. This is how we reconcile the basic premise underlying modern economics as the study of an unlimited wishes in pursuit of finite supplies.
The question then arises whether natural allocation(or rationing) is “fair.” Since fairness is a wholly subjective term, it cannot be answered in the realm of economics, but instead becomes a matter of politics. This is where the trouble begins, because what politicians most frequently do is to apply their own subjective notions of what is fair in place of the much more objective standard of a natural market. They concoct these notions to satisfy political constituencies, but the twist and turn in order to define the question as a matter of economics. Inevitably, they do so by reducing the question to the subjective grounds of a particular individual, or group, and ask whether it is “fair” that so-and-so cannot afford such-and-such. In this sense, the economics they are discussing are applicable to small groups, but not to the whole market.
What government schemers for socialized medicine have done is to insert government coercion into the place of the natural market allocation. If you say to me, “It is sad that Johnny cannot get his surgery because he has not the money,” if my answer is based on the free market, I must say “it may be sad, but it is fair because he could have obtained the money by previous work, insurance, charity, or even credit.” The fact that Johnny hadn’t the money for the surgery is not a justification to disclaim the objective fairness of the free market system, but sadly, that is how it is used by politicians. Enter the statist, and he will proclaim that he can reintroduce “human fairness” or “social justice” or some such enfeebling concept by virtue of government coercion. If Johnny hasn’t the money, the politician will take it from somebody else at gunpoint to pay for Johnny’s surgery, provided Johnny meets any requirements they may have enacted.
Perhaps the surgery Johnny needs is a kidney transplant, but rather than expend the resources, since Johnny is also a wheelchair-bound, elderly man, the government may say “You’re not worth saving.” Worse, if the government denies Johnny the ability to obtain his own health-care by his own means outside the government system, what the government is doing is to pronounce a sentence of death on Johnny. If Johnny happens to be a recent college graduate in his twenties, in otherwise good health, the government will view it as a good investment in many cases since he will pay much more in taxes over his expected lifetime than the surgery may cost. Notice that the decision criteria is entirely social, and based on the economics of government expenditures, which actually means: Political considerations. It is also the reason that every system of socialized medicine ultimately leads to many more people dying prematurely as they are denied treatments of which they would have availed themselves in an open market. If this were not true, we would not see so many from around the socialized world flocking here to pay cash for treatments they cannot obtain by any means in their home countries.
You might contend, as the leftists do, that this is done by private insurers routinely. There is some truth to this, but it is also substantially dishonest. As a participant in a free market system, you are free to choose an insurer and pay such premiums as you are willing and able, to cover everything to some gargantuan limit, or you may choose a policy less expensive, but also less thorough. In this manner, the rationing occurs because you have enough money, or you don’t, but that is up to your own resourcefulness and diligence and all the factors that frequently make the difference between relative poverty and relative affluence. You might decide at this point to take me back to the argument of the “unfairness of money,” but as I’ve already explained, in a free market, fairness is measured differently than in your subjective wishes.
If it was my choice as to which system I would endure, I would prefer to take my chances in the free market system, because I believe I can manage to afford the coverage I might need, but in a government system, no matter how diligent and efficacious had been my own labors, I might be told “sorry, you’re outside the limits established for this procedure,” and be denied treatment irrespective of my ability to pay. I would always choose this latter option, because it affords me the greater measure of freedom, and if it winds up that I was unable to provide the coverage I actually wound up needing, at least I will have nobody else to blame. That’s where the politicians come in, again.
Let’s dispense with Mayan calendars from the outset. Neither do I have any interest in misinterpreted antiquities made into modern hoaxes, nor do my readers have any interest in debunking them. If you came expecting that, please move back over to the MUFON website and carry on in peace, or “Live Long and Prosper,” or wait to be beamed up, or whatever it is you do. The coming year promises a great number of possibilities, but an accumulating body of evidence suggests that many of them are decidedly bad, at least to the greatest numbers of the American people. We face many challenges in the coming year, but they need not be apocalyptic. Rather than engage in a load of useless, fear-mongering hyperbole that will be all too common over the next week or so, let’s take a look at the real threats that we face, and conduct an honest assessment of our ability to mitigate them, both from the standpoint of individuals, and also as a nation.
Of course, the possibilities are endless, even discounting Mayan Calendars and the lot, but I think we can group these easily into three major categories, since there’s no real way to predict natural disasters despite the insistence of some who should have by now departed for MUFON. Let us consider our worst threats what they almost always really are: “Man-caused disasters” of one form or another, and that they fall into three major categories we I will list as economic, military and political. Carl Von Clausewitz would have argued that the latter pair are merely different forms of the same thing, but in this context, I’d like to confine them to their separate definitions.
Let us begin with the category most likely to bear rotten fruit: The economy is in a horrible condition, and despite the trickery of an administration using rigged numbers to make a case for re-election, it’s clear that we’re in serious trouble. Perhaps worse is the fact that in Europe and around the globe, the problem of sovereign debt is now choking off economic growth. The European Union teeters on the verge of collapse, and yet they continue the dishonest and immoral policy of putting good money after bad. Worse for we Americans, our own Federal Government and Federal Reserve have joined in the delaying tactic. All they really hope to accomplish at this point is to stall the inevitable long enough to cross the finish line in November. The question now becomes: Can they?
While the banking and financial segments remain in global turmoil, the larger domestic issue of immediate importance is the dramatic and persistently horrendous unemployment numbers. The most reliably consistent numbers from perhaps the most thorough analysis tell us that total unemployment now stands around 23%, despite the rosy picture created by the U3 numbers reported by the Bureau of Labor Statistics. That is a dangerous number, because it implies certain sociological results that will tend toward violent crime and general civil unrest. Worse, despite the fact that the U3 number will probably continue downward with even greater seasonal adjustments now being implemented as the administration continues to tinker with the numbers, there’s another problem to consider: The US is far from the only country seeing this sort of problem, as France is now reporting unemployment levels not seen since the Great Depression.
All of this paints a frightening economic portrait, but it pales when measured next to the potentially devastating effects of a collapse of the US Dollar. Nobody alive in the United States really has any sense of what hyperinflation looks like, but here’s a primer on the subject. The problem is that such a collapse is now increasingly likely, since our own currency has been so thoroughly intermingled with the Euro. It’s likely that if the Euro goes, our dollar will soon after follow, and we now find that the US Treasury has permitted large institutions with large positions in European derivatives to seek shelter under the umbrella of the FDIC. This effectively puts US taxpayers on the hook if these things fail, and you can bet that if the Euro falls as it now seems is inevitable, we’re in for a rude awakening.
The military situation is becoming increasingly grim in the Middle East and Southwest Asia. Having pulled out of Iraq less than one week ago, we are already seeing an increase in violence in that country. Obama may have managed to pull us out of Iraq, but history may well record he had done nothing but to snatch defeat from the jaws of victory. Whether you favored the Iraq war, and the occupation that has persisted for most of a decade, it goes without saying that it is the height of foolishness to have spent so much in blood and treasure only to walk away when victory was close at hand. It might have taken years more to stabilize Iraq completely, but it is doubtful that it will be able to stave off Iranian intervention.
Iran is now flexing its muscles in the Persian Gulf, and is threatening to close off shipping. That would become an instant crisis, and might well start a round of hyperinflation as fuel prices would likely soar to levels scarcely imagined. War in any form in the Middle East threatens our security, and threatens to cripple our economy, so that a foreign policy of the sort we’re now witnessing threatens to undermine the future of the United States.
Israel continues to be isolated, and it’s unlikely they’ll see any substantial relief while Barack Obama persists in office. More, leftist elements continue to work to undermine Israel by working in concert with a number of radical Islamic groups. Israel must now concern itself with an increasingly antagonistic Egypt, and this suggests a scenario in which Israel may have little alternative to at some point make a vigorous defense either by preemptive strikes, particularly against Iran, but also perhaps against other states that continue to have designs on their nation. This remains true for the so-called “Palestineans,” as well, and there are numerous scenarios by which this could rapidly escalate into full scale war. Any such war is apt to have profound repercussions here at home, but also globally.
The next area of concern is the political realm. We have a President that is quite happy ruling in a manner contrary to the will of the people, and he’s content to watch things collapse as he does so. Worst, his overarching policy is one of bailing out the Europeans to no avail, and in supporting our historical adversaries around the globe. Still, even with all of this agitating against his re-election, he is thought to have good prospects if only because the sheer number of dollars he has raised and will continue to raise will present a serious obstacle to any opponent.
Speaking of his opponents, all that have materialized thus far have serious problems that will likely make them less than thoroughly effective by way of opposition. Romney will be obliterated on his flip-flops, and it will be shown that he is more like Obama than Obama himself. Meanwhile, the strategy Obama is broadcasting is to run against Congress, specifically the House of Representatives now controlled by the Republicans, and they’re bending over backward at every opportunity to make deals with him and Harry Reid over in the Senate. What neither Boehner nor any of the other establishment Republicans understand is that each time they make deals with Obama, they’re cutting their own throats. Of course, RINOs like Senator Dick Lugar, (R-IN,) insist otherwise as he now prepares to face a primary challenge of his own.
Add to this the uncertainty about the future of Occupy Wall Street, and what role they’re apt to play in the coming elections, and what you have is a recipe for disaster, particularly if any of the economic or military possibilities discussed herein come to fruition. I wonder when it comes down to it, and an angry mob packs the mall in Washington DC, whether Barack Obama will stand by the principle underlying his earlier declaration that “Mubarak must go.” After all, what will happen when the American people are demanding he must go? My bet is that such would be viewed differently, somehow.
The inevitable question I receive after such a posting is: “What can I do about it?” The simple answer is “I don’t know.” The more complete answer is “I can tell you what I am doing,” and leave you to judge for yourself. You must prepare a few things, and those must include supplies of necessities such as food and medicine. You must be ready to live without fuel. You must be prepared to barter when necessary. You must absolutely be prepared to defend yourself, your home, and your family. You must prepare your family to defend themselves in your absence. Again, most of these things are measures prudent people should prepare for in all seasons, because one never knows what will happen, from natural disaster to war to almost any possibility. Maybe it’s the soldier in me, but I believe in preparedness, and whatever happens, I will always bet on those who prepare over those who don’t. It’s really that simple.
On the political front, I will say this much: Americans must become engaged like never before, and here I am speaking specifically to Tea Party patriots, constitutional conservatives, and anybody else who wants to see the nation put back on a course that will promote prosperity. We must demand that our elected representatives, our Senators, our state and local officials, and yes, our candidates for the nomination all set forth specific objectives for slashing expenditures, reforming government, and holding their feet to the fire. We must be discerning and vigilant, and not be tempted to fall for what appear to be quick and easy solutions to problems that will not be resolved by half-measures. Unless and until we the people make enough noise, politicians will pander but make no substantive change, because much like our President, they are in a perpetual delay tactic, every trying to stave off your discovery of how poorly they have done as stewards of your government.
On the bright side, we might just make it through, but if so, it will only be because we had done all we were able, and the sooner people recognize that this will take their direct involvement, the more likely we are to avoid disaster. Part of what I learned as a young man in the Army is that to prepare is also to repair, because you will inevitably discover things in your preparations that will help you make the scenarios for which you prepare less likely.
It’s much like Y2K at the end of 1999, for which governments and businesses spent untold billions to prepare for a disaster that never substantially materialized. Many talking heads have assumed that it didn’t occur because it could never occur, but this is dishonest. The truth is that our preparations largely prevented catastrophe, but history records no catastrophe, so it’s hard to demonstrate. All those preparations were not “for nothing,” because in truth what they did was prevent the disaster. That’s the best reason to prepare. It always has been. As we lurch toward a new year full of frightening possibilities, it’s also a year of substantial hope.
This has to be one of the most ridiculous pronouncements made by a governmental body in some time, not because it is inaccurate, but because they’ve apparently just now taken notice. YahooNews is reporting that the IMF’s worried about the global economy, and it’s new head, Christine Lagarde is pointing out the problem as a “crisis in confidence in public debt.” No, really, she said this. (For her next trick, Lagarde will likely tell you the sky is blue and that the sun rises in the East, while she’s giving out revolutionary information.) What Lagarde doesn’t mention is the IMF’s role in all of this, and the fact that the grotesque amounts of public debt have been augmented by loans from the IMF itself, in propping up all of these nations. This is much in keeping with the failed policies that have threatened the world economy, but rather than re-think the strategy that has only deepened our troubles, Lagarde criticized nations that seek to shore up their own economies and financial markets, and while she didn’t name names, it’s clear that she’s talking primarily about the British. She offered this:
Part of the problem, she said, has been national calls for protectionism, making it “difficult to put in place international coalition strategies against it.”
Lagarde added: “National parliaments grumble at using public money or the guarantee of their state to support other countries. Protectionism is in the debate, and everyone for themselves is winning ground.”
Let me translated Lagarde’s lament: Politicians in much of the world (excepting perhaps only the US) are beginning to heed the voices of their people, who are beginning to demand that their politicians begin to look out for their own nations first, before worrying about the sovereign debt crises of others. So Britain, for instance, that is doing the smart thing and walking back its relations with the European Union and its failing currency is a bad country, while we in the US who continue to shovel dollars into the IMF via the Federal Reserve are “smart” and “thoughtful,” and the rest of that patronizing tripe that only works on liberals and statists. Meanwhile, those of us who live in Realityville, USA, are beginning to understand that this crisis is largely the result of bad ideas promulgated by statists the likes of Christine Lagarde.
This announcement is an insult to every thinking person on the globe, and it show just how far these people will go in order to prop up a lousy idea, or a whole play-book full of them. As if this wasn’t bad enough on its face, Lagarde offers still worse advice by way of a warning:
Emerging countries, which had been growth engines for the world economy before the crisis, have also been affected, said Lagarde, citing China, Brazil and Russia.
“These countries, which were the engines, will suffer from instability factors,” she told the newspaper.
In other words, these countries that have all seen burgeoning exports are now beginning to contract because general consumer demand is down in the importing nations, including the US and the EU. In short, Lagarde doesn’t want you to notice that she’s making an admission about the future prospect of the EU, with its currency in turmoil, and the US, where currency in large amounts has been sent to prop up this entire mess. What she doesn’t say directly, and dares not admit, is that the coming collapse is already beginning in a more serious way, measured in the GDP of what had been the leading growth engines prior to the onset of the financial crisis.
In short, Lagarde is asking, or even chiding countries to continue a policy that is nothing short of suicidal, all on the basis of the proposal that the IMF be provided more money to loan to nations already deeply indebted. This is both the financial and moral equivalent of urging the family with twice their annual income in short term debt to apply for another credit card or two. What she is pretending is that the situation can be repaired by some notion of restored confidence among investors and consumers who now [rightly] fear that nothing but collapse lays along this road.
They’re right to doubt, and the people of Britain and every other nation are right to worry as what Lagarde seems to be suggesting to European politicians, but indeed politicians everywhere, is that they should take one for the team, not as politicians, but as sovereign nations. Britain would be right to reject her words as the ravings of a con artist, selling the same old Ponzi scheme again and again. We in the US could only improve our position by following the British lead away from the EU, and the Euro, but our current financial and political leadership is instead tying us more closely to it.
It’s time to face reality: The Euro was a doomed currency from the outset, and inviting in those nations with questionable currency and dishonest fiscal policies was never going to make anything but a disaster, but the people of Europe were suckered into it, and now the US is going along. Their shrill warnings of dire collapses if we don’t go along are merely a postponement of a greater crisis with each subsequent delay. It’s time to face the music, and as the old saying goes, we must refuse to put even more good money after bad. So bad is it now that it would be more accurate to say that we are putting bad money after even worse.
The only way to prevent a global collapse is to cut our losses now. Stern fiscal policies must prevail, and money must grow tighter. At this very moment, at the US Treasury and the Federal Reserve, they’re concocting plans to export your future wealth to Europe in order to buttress a currency that won’t be saved, and each dollar they pour into the effort only devalues the ones in your pockets. It’s time to put a stop to all of this, and if we’re to save our country, we must start here, and we must start now, and short-run extensions of payroll tax-cuts won’t get it done. We need real, drastic spending cuts that sharply curtail our budget deficit, something on the order of what Ron Paul is proposing, in the realm of one trillion dollars or more in spending cuts immediately. If you want sound currency, it has to start at home, and whatever else you may think of Ron Paul, he’s right about this.
This is a crying shame, and conservatives ought to be weeping, while Tea Party patriots ought to be throwing a fit. John Boehner has managed to lead the House Republicans directly into the jaws of yet another defeat, and in the end, when he surrendered, he did so because losing is all Boehner really knows how to do. The Republicans in Congress capitulated to Barack Obama and Harry Reid again on the matter of the payroll tax cut extension. House Republicans didn’t learn the lesson of 2006, so a mere five years later, they still think they can conduct themselves as candidates throughout their terms, considering only short-run political expedience. The problem with GOP leaders in the House is that each time they go to the mat, but then subsequently cry uncle, they’re harming themselves and the country. This so-called compromise was nothing but a surrender that merely weakens the Republicans, but more importantly, the country.
John Boehner suffers from an inability to lead. He simply doesn’t understand leadership, or he’s not intellectually vigorous enough to exercise it. Either way, he’s a perpetual loser, and we shouldn’t dare hope he will accomplish anything useful during the term of this Congress. Consider him either intellectually or morally incapacitated, and save yourself some trouble fretting over the endless string of defeats House Republicans will suffer because John Boehner doesn’t know how or isn’t willing to lead.
In this context, leadership would have meant sending his members out to have town hall meetings, and to send them forward to every media outlet on which they could find time, and make the case first to their own core of support, and get their buy-in followed by a more active support. Instead, Boehner sat back and waited for it to happen, and he knew it would, but it’s fair to say he helped engineer this defeat. He’s bent upon the notion of trying to restore order within his caucus, and he’s willing to become minority leader to do so.
This latest flap was more than political circus, but that’s how it has been portrayed, and given the surrender of the Republicans, that’s how history will now record it. The truth is that big issues had been at stake, but due to a little bad press, the Republicans wet their collective diaper and ran home. Boehner will offer that this happened because they’re only “one-half of one-third of the government.” The facts suggest otherwise. Did he try to rally the conservative base? Did he seek out support in such ‘friendly media’ where his own declarations haven’t already poisoned those wells? No. He stayed in the back rooms, smoke-filled no longer, and had his head handed to him on a silver platter. He knew it was coming, and indeed, he invited it.
The first thing he did to invite this had been every previous surrender going at least as far back as the debt ceiling vote, when he actually worked on a backroom deal with Reid to undercut the House bill known as “Cut, Cap, & Balance.” From that moment on, Democrats knew they had a patsy who would do anything to avoid a little negative press. In the end, he and his Republican members must now share in the blame for the credit rating downgrade we suffered as a result. Had he instead remained willing to let everything shut down, he might have forestalled the downgrade, because the rating agency might have concluded at least one party had gotten serious about budget control. Politically, he would have taken a hit in the short run, but the truth of the matter is that Democrats would have relented once their base started screaming loudly, or rioting, because they had not gotten their hand-outs on time. There’s no sense making a stand if you’re going to fold at the first sign that somebody’s calling your bluff.
Democrats read Boehner’s moves as clear telegraphing of a bluff, and they called without blinking. Ever since then, the Obama looks at Boehner and thinks: “There’s my b*t*h.” The tears certainly don’t help with that impression. Since that first monumental cave-in, each subsequent instance has been repeated, only more quickly, each time with with less pressure than the last, as conservative and Tea Party members of the caucus are now demoralized. They see things slipping away, much as they did in 2005-2006, and it’s all for lack of effective, committed leadership.
On this basis, I have written a letter I am sending to my own member, and I want from him a pledge to support somebody other than Boehner and his crew for leadership, whether they maintain the majority in 2012 or not. The way things are going with Boehner, you’d better plan on “not.” As it is, due to his vote on the Debt Ceiling matter, I am already eying potential primary challengers for my own Representative. If he’s going to continue to support the sorry leadership of John Boehner, it’s best to get rid of him, too.
Now, for those of you who weren’t paying attention, let me explain what has happened: The House approved a version of the extension much to the liking of the Senate, and it does not include the Keystone XL pipeline provision, meaning tens of thousands of jobs and a fresh conduit for oil will not be had by Americans any time soon. While you must certainly lay the greater portion of blame on the actions of Obama and Reid, the truth is that Boehner shares in this too.
I realize some will say “but, but, he’s right: Without the Senate, what could he do?” The answer is always the same: Stand on principle. Be willing to take the bad press. Be willing. The problem is that this sort of thing makes its own bad press that goes on long after the terms of surrender were signed. You see, when Boehner plays brinksmanship, but then walks away with nothing, it gives ammo to the opposition that this had only been a political game. This is why the Republicans took a beating from Bill Clinton in 1995: They ultimately flinched first in this game of chicken, making it look for all the world as though they had been merely posturing right along.
Instead, had Boehner rallied every member of the House Republican caucus to stand firm, and held out indefinitely, shutting down government, they could have gone to voters saying: We had to be the responsible party, and we had to put our foot down against irresponsible and reckless spending proclivities of the President and the Senate. The people who would have been angry at them would likely have been people other than who had elected them. If they can’t withstand some bad press now, when will it be better? If they will not stand on principle now, when the country is on the verge of a greater depression, if not in it, when will they find the guts to do it?
The answer: Never. John Boehner and his kind are so consumed by holding onto power, and holding onto office, that they cannot dare to risk it all in order to stand for the principles on which they were elected. One begins to wonder if this is because they’re not hip-deep in all of the crony capitalism and insider trading about which we’ve been hearing, because it’s not as though House members have it so good solely on the basis of their salaries and benefits. One quickly begins to wonder if the monetary inducements to hold office aren’t greater in fact than appears on the surface, because I do not think I could trade my principles for the salary they’re paid. No, there must be something more to it, or these are the most morally corruptible people on the planet.
It’s time we hold them to their promises, and the principles they declare while campaigning. For me, that’s going to entail spelling it out for my own representative. I’d suggest you do the same, but what we had better do is say it, and mean it, lest they get the same idea about us as Democrats now have about them and their lack of spine.
Before you discard what I’m telling you as the mere rantings of another conspiracy kook, I’d like you to consider with me what are the facts of President Obama’s speech in Osawatomie, KS, on Tuesday. Apart from the opening gaffe that I’ve already covered, I’d like to talk to you about the dishonest and irrational pronouncements of this president, and the virtual repeat of history’s worst calamities this man is intent upon recreating. When I examine his words, and I think about their meaning, it becomes clear where this president is leading us. If you think the worst regimes of the 20th Century were monstrous, what this man has in store for the American people will shock you when you consider what he’s really advocating. Most people will hear the applause lines and think this had been just one more political speech, but this speech had been the confessions of a tyrant. I’d ask you to bear with me as I help you to see the plain truth of it, if you haven’t noticed it already.
The first thing this professional demagogue said was intended to establish his legitimacy via his maternal grandparents. He spoke about their lives, and the work they did, and he sugar-coated their beliefs. He used his grandparents as a device of nationalistic appeal to his countrymen:
“My grandparents served during World War II. He was a soldier in Patton’s Army; she was a worker on a bomber assembly line. And together, they shared the optimism of a nation that triumphed over the Great Depression and over fascism. They believed in an America where hard work paid off, and responsibility was rewarded, and anyone could make it if they tried — no matter who you were, no matter where you came from, no matter how you started out.”
Germany wasn’t fascist in strict definition. Germany was a state dominated by national socialism. This is the root of the term “nazi.” The original word that is its root is the German Nationalsozialismus. With this in mind, it was then surprising to some to hear President Obama say the following:
And in 1910, Teddy Roosevelt came here to Osawatomie and he laid out his vision for what he called a New Nationalism. “Our country,” he said, “…means nothing unless it means the triumph of a real democracy…of an economic system under which each man shall be guaranteed the opportunity to show the best that there is in him.”
You can put a lipstick on a pig, but it’s still a pig. The President here is selling the notion of a “New Nationalism” that he defines as Teddy Roosevelt did. Roosevelt’s nationalism had a distinctively socialist flavor, as does the President’s. For those unfamiliar, or who have been misled by generations of revised history, let’s clear something up: The Nazis were never right-wingers. The notion of right-wing as we know it in this country is entirely unlike that which is known to Europeans. In our terminology, right-wingers are conservatives, and libertarians. In Europe, the right wing is merely a nationalistic slant on the same old socialism. Obama understands this, and this is why he references Teddy Roosevelt, a man thought kindly by many Americans for his purported streak of independence, but more importantly, for his charge up San Juan Hill. The truth of the matter may be disconcerting to some Americans, but Teddy Roosevelt was a progressive, little different from Wilson, or any of the others, varying only slightly as the Europeans of the day who were either internationalists(Wilson) or more nationalist(Teddy Roosevelt.) They were all monstrous leftists.
The cat Mr. Obama here lets out of the bag is that he’s about most of the same things. He says here that he is in favor of redistribution of wealth in the name of social justice, much like Teddy Roosevelt had been, but also like another monster, in Central Europe arising from the ashes of a post-World War I Germany. In order to downplay fears, Obama offered:
Now, for this, Roosevelt was called a radical. He was called a socialist — (laughter) — even a communist. But today, we are a richer nation and a stronger democracy because of what he fought for in his last campaign: an eight-hour work day and a minimum wage for women — insurance for the unemployed and for the elderly, and those with disabilities; political reform and a progressive income tax.
I wouldn’t laugh too hard. Roosevelt had become a radical, and he was a socialist, and to an extent, even a communist. Let’s be clear about another thing, while we consider all of this: The only difference between Hitler’s Nazi Party and Stalin’s Soviets is that the two were rival gangs within the same broad philosophical and political range. There’s no difference, in fact, between their theories, because what they all really are falls neatly into a simpler term, popularized by Ayn Rand, and reintroduced to Americans who had forgotten it, or never known it, by radio host Mark Levin in recent years: Statists.
All of European polity, then as now, consists almost entirely of one form of statist thought or another. The particular form is irrelevant, because they’re all equally bad in the end. Statism is best defined as the theory of politics that demands all people must exist for the purposes of the state, as some form of the expression of the will of the collective, or of God. Theocracy is one form of religious statism, but so is Monarchy(Divine Right, and all of that.) Secular statism includes Communism, Fascism, and Nazism, but also Democracy. The Chinese government has now rebranded themselves as State Capitalists. I’d like you to consider the meaning of that term, because it means simply capitalism as practiced by the state without respect to the notion of individual rights. Strangely, this concept sounds a good deal like the National Socialism Barack Obama now offers, but there is an excellent reason this is the case: They are for all intents and purposes identical.
Both concepts are characterized by a diminution of the rights of individuals, and the aggrandizement of the state. The right of property is in varying degrees eliminated, and ultimately, this always leads to a totalitarian state in order to keep the populace suppressed. What Obama now offers is no different, if you listen closely. The President of the United States has just declared that the idea of Capitalism, and Free Markets, is dead:
Now, just as there was in Teddy Roosevelt’s time, there is a certain crowd in Washington who, for the last few decades, have said, let’s respond to this economic challenge with the same old tune. “The market will take care of everything,” they tell us. If we just cut more regulations and cut more taxes — especially for the wealthy — our economy will grow stronger. Sure, they say, there will be winners and losers. But if the winners do really well, then jobs and prosperity will eventually trickle down to everybody else. And, they argue, even if prosperity doesn’t trickle down, well, that’s the price of liberty.
Now, it’s a simple theory. And we have to admit, it’s one that speaks to our rugged individualism and our healthy skepticism of too much government. That’s in America’s DNA. And that theory fits well on a bumper sticker. But here’s the problem: It doesn’t work. It has never worked. It didn’t work when it was tried in the decade before the Great Depression. It’s not what led to the incredible postwar booms of the ‘50s and ‘60s. And it didn’t work when we tried it during the last decade. I mean, understand, it’s not as if we haven’t tried this theory.
Not only has Obama told a gigantic lie, but he has rewritten history as well, all in two nifty paragraphs. For ease, let’s examine them in list form:
“The market will take care of everything,” they tell us.
“If we just cut more regulations and cut more taxes — especially for the wealthy — our economy will grow stronger.
“Sure there will be winners and losers.”
“It doesn’t work.”
“It has never worked.”
“I mean, understand, it’s not as if we haven’t tried this theory.”
I don’t know of an economist, anywhere, who has ever suggested the free “market would take care of everything.” This is either a bold-faced lie, or a statement of Obama’s grotesque misunderstanding of capitalism. To operate, a free market requires the existence of a government to enforce individuals’ rights to life, liberty, and property, and to punish those (and only those) who violate those rights. The market also won’t take care of you, the individual. That’s your job. The market and free-market economists have never made promises to take care of individuals. Instead, they have said individuals should take care of themselves, and within that framework, the market will allocate resources accordingly.
The idea is not merely to cut taxes and regulation, but the spending that demands ever more of it. For all the huffing an puffing that emanates from Washington, we’ve seldom seen actual reductions in spending, and certainly, never enough to make a long-lasting systemic improvement. I would like for this lying, pathologically dishonest president to tell us in which years the total number of regulations in the United States ever saw a net decrease. Please, name that year. Even under Ronald Reagan, that was never true, although her certainly did curtail the rate of growth a bit. Still, I have yet to see any administration leave office with a smaller body of regulations in force than had been upon its inauguration. He’s lying.
There will always be winners and losers. That’s life, and that’s nature. What the president doesn’t want you to realize is how big a role government now has in choosing who those will be. Redistribution of wealth, his precious socialism, is nothing but the government choosing who shall win or lose.
Here, he tells us free market capitalism doesn’t work, and never has, and pretends we have tried it. When? Not in my lifetime. Not in his. Not during the life of his parents or grandparents. No, free market capitalism, to the degree it ever existed has never been known in any substantial degree by any American less that 121 years of age. How many of those are around? The simple truth is that since 1890, with the passage of the anti-capitalist, anti-free market Sherman Anti-trust Act, what had been the dawn of full capitalism in America was quickly put on the tracks toward the establishment of a nation of plunder, as per Frederic Bastiat’s description.
President Obama is lying to the American people, and there’s simply no way around that fact. More importantly, since he wouldn’t be the first proven liar to occupy the White House, he’s proposing what can only be considered the most radical sort of regime for America’s future. He proposes full governmental engagement in the redistribution of wealth, and his lengthy speech is designed to give cover to it. Time after time, he ignored the actual historical record in order to present you with lies, mis-characterizations, and thorough revisionism. What Barack Obama herein offers you is the promise of National Socialism, as he has now freely admitted, but also State Capitalism as the Chinese propagandists now call their system. What you need to know is that when Barack Obama tells you about his intentions, he’s telling you about the “dreams from [his] father,” an avowed communist. You can put lipstick on them, eye shadow, and false eyelashes too, but his plan is the same old National Socialist pig, and so is our president.
His presidency is now itself a national emergency, and escorting him firmly out through the White House gates in January 2013 must be our response, having inaugurated his replacement. There is nothing that can mitigate in favor of keeping a man in that high office who wishes to undo the whole of western civilization in the name of a failed theory that has accounted for the slaughter of tens or hundreds of millions of people. Obama must go.
We’re well past the end of the efficacy of such charades as the one the Federal Reserve is now undertaking. With Europe’s currency on the verge of collapse, Standard and Poor’s has put 15 European nations on negative credit-watch. Worst of all, the Federal Reserve sees the threat to financial stability, and rather than moving to protect the American people, our own monetary agent is instead moving to shore up the Euro via the International Monetary Fund (IMF). Every American should be incensed by this move, because what it really offers is an international version of “too big to fail.” The US has become so entrenched in the future prospects of the Euro currency that the Federal Reserve now believes bailing it out may be the only way to save ourselves. If this sounds vaguely familiar, it should, because this is the same basis by which the American people were suckered into backing up and bailing-out those banks deemed “too big to fail” back in 2008 and 2009, under Presidents Bush and Obama, respectively.
Readers may remember a few weeks ago that I reported the swindle being permitted by Treasury, where Euro-based derivatives were now to be backed by the FDIC. That risky scheme actually puts American tax-payers on the hook for hundreds of billions of dollars. Our Federal Reserve has already lent more than $7Trillion to foreign banks, and now it seems they’re intent upon providing still more. It’s an obscenity that at this late date, we’re still pursuing a failed policy that puts bad money after worse money. Why? Simply put, we are so thoroughly invested in the Euro experiment that if we simply walk away, it will fall, and likely take us with it. The problem is, as I’ve previously explained, that one cannot save the Euro by this method. There is only one way in which the Euro might be saved, but it will require something the European people likely will riot to oppose: Vastly more effective fiscal control.
To approach this problem will require that which governments virtually never do: Restrain spending, while giving up some controls over the economies of their respective nations. It will require that they cut social spending, but also government employment dramatically. That’s where the real problem begins, because people now long-accustomed to a vast and prolific welfare state do not give them up without a fight. Of course, give them up they will, one way or another, when their system ultimately collapses.
We’re not much behind Europe in that development, and our own credit-rating downgrade earlier this year was simply the beginning. We face the same choices, although still less severe. Unfortunately, by entangling us with the Europeans, what the Federal Reserve and all of those banks deemed “too big to fail” that have been major players in the Euro-zone, what this means is that it will accelerate our own collapse. We may even go down, not following behind Europe, but holding hands and walking side-by-side with them over the precipice.
It’s anybody’s guess how long this can be extended. It’s possible we might not make the end of the year, or the end of two years before this collapses, but with the direction in which we’ve been heading, collapse seems to be inevitable. The one and only saving grace America may have, as distinct from Europe, is a healthy sense of charity by comparison. Americans remain, even in our current economic distress, the most giving of people. If we are finally forced to confront out own welfare state, there may be some hope that the nation will find some way at least to feed its people, but for Europe, I have no such hope.
Has our economy been so bad, for so long, that it has caused the flow of illegal aliens into the US from Mexico to a trickle? That is the supposition of a Washington Post article, and while they point to other obvious factors such as the new laws in Arizona and Alabama, they find a way to dig a positive out of Obama’s poor job on the economy, while also suggesting this is the time for that “immigration reform” (a.k.a. “amnesty”) that the establishment has been trying to foist on Americans for some time. One of the other things about which they do not conjecture is that under Obama, ICE has been ordered to make fewer arrests via an executive order implementation of some aspects of the “Dream Act.” I find the entire matter to be of questionable merit, in part because the Washington Post has a history of trying to conceal this president’s failures, or find a silver lining to every towering storm-cloud that attends Obama’s performance as president, but also because this administration has failed the American people at every turn.
Naturally, the article documents this as a substantiation of Obama’s success:
The lower number of apprehensions supports the Obama administration’s contention that the border is more secure than ever — that the doubling of Border Patrol agents since 2004, along with hundreds of miles of new fence, cameras, lights, sensors and Predator drones, has helped slow the illegal flow northward.
I have reason to doubt the Obama administration’s efforts as the cause of the reductions claimed in this article, unless we consider the reasoning at which the writers finally arrive on page 2 of the article. There, the Post reveals the biggest driver of the reduction:
“The arrests on the border are moving like the U.S. economic cycle,” said Juan Luis Ordaz, senior economist for the Bancomer Foundation. Ordaz and colleagues say Mexican and U.S. data suggest that the number of Mexican migrants arriving each year in the United States has been cut in half since 2005 — and that poverty rates for Mexican migrants living in the United States have grown to 30 percent from 22 percent in 2007.
Especially hard hit in the economic downturn — and the busting of the real estate bubble — were the home-building and construction industries, which employ an outsize number of illegal workers. “Migration has decreased because employment opportunities in the United States are not good. Fewer migrants have full-time jobs. Hours are reduced. Wages are lower. The amount of money they send home is less,” said German Vega of the College of the North in Tijuana. “And another reason is organized crime.”
So you see, even when Obama fails, he’s a winner, according to the post. It’s small wonder that conservatives and Tea Party folk see the establishment media as a bankrupt source of information. The truth of this article, like most we get from the so-called “mainstream media” is contained on the second page, if its fully reported at all. In any event, this case points out just how bad our economy really remains, despite all the nonsense about “jobless recovery” and the other happy-talk with which the Obama administration has tried to swindle the American people. That illegal immigration may be down for the moment is great, but the cause of it has nothing to do with the allegedly ceaseless efforts of this administration, but instead much more to do with the fact that the economy has yet to recover. I’m certain that my readers will be as impressed by this bit of news as I have been. Simply consider that we could have four more years ofthis…
That’s what we’ve permitted ourselves to become, isn’t it? Rationalize it in every conceivable way though we may, when we get beyond all of the petty justifications we spout in order to sound less monstrous, we have become a nation of plunderers. There are exceptions, as with any generalization, but it cannot now be said that a majority of Americans have clean hands in the matter. To some degree, greater or lesser, the blood of this fact taints most of us. Some of you will know what I mean, but others may be less familiar with the concept. I believe in informed consent, which means that to give one’s consent to an action, one must have full knowledge of the consequences, risks, and tribulations that may attend that action. What I do not believe is that by ignoring the full facts, but still giving one’s consent in willful ignorance, one can somehow hope to evade moral responsibility for the results. In his great text, The Law, Frédéric Bastiat, the great French economist, statesman, and author offered all of the reasons a nation must avoid transformation into a den of thieves and villains, though the robbery be legalized. It is important to note that as the United States has been on a long and progressive march to precisely the sort of nation Bastiat lamented, most of our citizenry have accepted this devolution.
Our founders, imperfect though they may have been, understood clearly what Bastiat would tell us only a half-century later. Though they were no longer alive to appreciate his works, appreciate them they would have because in them may be found some of their own ideas. What the founders understood, but Bastiat made explicit, is that the only thing a government offers to its people is force. By force, I mean the legal monopoly on power to coerce, compel, and even kill. Strip all of the other dressings from the function of government, and this is all that remains. Bastiat asked the question: In which purposes may that force be turned? His answer was simply: “Justice.” At this point, many become confused, because the term justice has been likewise demolished and diluted and demeaned to have virtually any and all possible meanings at once. In Bastiat’s conception, justice was merely the protection of the rights of life, liberty and property, as well as the enforcement of compensations and punishment for the violation of same. In short, Bastiat argued that government exists to create an objective guarantor of these simple human rights. For students of American history, familiar with our founding document, the Declaration of Independence, this idea should be very familiar indeed:
“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights,[74] that among these are Life, Liberty and the pursuit of Happiness. That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed.”
Each of us has a natural right — from God — to defend his person, his liberty, and his property. These are the three basic requirements of life, and the preservation of any one of them is completely dependent upon the preservation of the other two. For what are our faculties but the extension of our individuality? And what is property but an extension of our faculties? If every person has the right to defend even by force — his person, his liberty, and his property, then it follows that a group of men have the right to organize and support a common force to protect these rights constantly. Thus the principle of collective right — its reason for existing, its lawfulness — is based on individual right. And the common force that protects this collective right cannot logically have any other purpose or any other mission than that for which it acts as a substitute. Thus, since an individual cannot lawfully use force against the person, liberty, or property of another individual, then the common force — for the same reason — cannot lawfully be used to destroy the person, liberty, or property of individuals or groups.
What Bastiat understood too well, as his own nation began its collapse into socialism, is that there can be no law that does not respect the rights of life, liberty and property without destroying the entire purpose of law. Limited to these ends, but nothing more, the law serves all people equally, showing favor to none, but merely confirming the natural rights of all people. His enduring argument is that a nation based on such an objective standard of law could flourish, and that its people would have none to blame but themselves for their particular predicaments or standing. Of a “Just and enduring Government,” Bastiat wrote:
If a nation were founded on this basis, it seems to me that order would prevail among the people, in thought as well as in deed. It seems to me that such a nation would have the most simple, easy to accept, economical, limited, nonoppressive, just, and enduring government imaginable — whatever its political form might be.
Under such an administration, everyone would understand that he possessed all the privileges as well as all the responsibilities of his existence. No one would have any argument with government, provided that his person was respected, his labor was free, and the fruits of his labor were protected against all unjust attack. When successful, we would not have to thank the state for our success. And, conversely, when unsuccessful, we would no more think of blaming the state for our misfortune than would the farmers blame the state because of hail or frost. The state would be felt only by the invaluable blessings of safety provided by this concept of government.
It can be further stated that, thanks to the non-intervention of the state in private affairs, our wants and their satisfactions would develop themselves in a logical manner. We would not see poor families seeking literary instruction before they have bread. We would not see cities populated at the expense of rural districts, nor rural districts at the expense of cities. We would not see the great displacements of capital, labor, and population that are caused by legislative decisions.
The sources of our existence are made uncertain and precarious by these state-created displacements. And, furthermore, these acts burden the government with increased responsibilities.
This is a monumentally important concept Americans must finally reconsider: So long as government extends into all parts of every American’s life, no American is safe from the predations of other Americans. So long as it is accepted that government’s duty is merely to guarantee the rights of individuals, the government is correctly limited, and it does no harm to any citizen. Each citizen is then safe from predation, or as Bastiat calls it, “plunder,” because protecting people from plunderers, or punishing plunderers is the government’s only just purpose. As Bastiat explains, man can live by only two basic methods: by his own ceaseless labor in creation of property(material wealth,) or by seizing the property(and wealth) of others. That’s really all there is, and no exceptions exist in all the world. What Bastiat noticed is that since people have a tendency to exert themselves to the least necessary extent, they will easily be convinced to engage in plunder by their own rationalizations, or the justifications provided by others. This is the siren song of socialism, or indeed any form of statism, and Bastiat knew it well. In explaining how plunder is to be prohibited by the law, he wrote:
It is evident, then, that the proper purpose of law is to use the power of its collective force to stop this fatal tendency to plunder instead of to work. All the measures of the law should protect property and punish plunder.
Bastiat also understood what would happen when the law is turned to the purposes of legalized plunder. When the proper purpose of law is to prevent or punish plunder, turned to the purpose of managing the plunder instead, the law becomes a great and vast evil from which no man is safe. This is the reason our framers gave to us a Constitution that protected against plunder, even if the understanding of that Constitution has been perverted precisely to permit the very practice it had been instituted to prevent. On the Results of Legal Plunder, Bastiat wrote:
It is impossible to introduce into society a greater change and a greater evil than this: the conversion of the law into an instrument of plunder.
What are the consequences of such a perversion? It would require volumes to describe them all. Thus we must content ourselves with pointing out the most striking.
In the first place, it erases from everyone’s conscience the distinction between justice and injustice.
No society can exist unless the laws are respected to a certain degree. The safest way to make laws respected is to make them respectable. When law and morality contradict each other, the citizen has the cruel alternative of either losing his moral sense or losing his respect for the law. These two evils are of equal consequence, and it would be difficult for a person to choose between them.
The nature of law is to maintain justice. This is so much the case that, in the minds of the people, law and justice are one and the same thing. There is in all of us a strong disposition to believe that anything lawful is also legitimate. This belief is so widespread that many persons have erroneously held that things are “just” because law makes them so. Thus, in order to make plunder appear just and sacred to many consciences, it is only necessary for the law to decree and sanction it. Slavery, restrictions, and monopoly find defenders not only among those who profit from them but also among those who suffer from them.
Consider this carefully in examination of our own country, not as it was founded, but as it has come to be over the span of the last century of Progressivism, from both the left and the right. His enduring prescience was to realize that such a system would of necessity destroy and obscure the differences between actual justice and all the fraudulent forms we’ve been offered in its place. What else could be the meaning of such contrived notions as “social justice,” “environmental justice,” “economic justice,” “racial justice,” and any other contrivance and dilution of actual justice you can imagine? Consider only one of these, for instance “economic justice,” by which the speaker intends to say that taking from one person to redistribute to another person or person(s) is a matter of justice. Is it? Or is it truly injustice? If plunder is the determinant, then such notions are all only plunder dressed up behind a facade of some bastardization of actual justice. As Bastiat notes, justice concerns itself only with the protection of life, liberty, and property. With what does “economic justice” concern itself? The answer is clearly: The collective violation of the rights of life, liberty and property.
Many will have noted that when Governor Palin began making use of the term “crony capitalism,” others began to notice the issue. “Crony capitalism” is merely another form of plunder: Use the law as an instrument to get from others that which you otherwise would not have gotten. What it describes is a system in which plunder is not merely legalized, but normalized and institutionalized through the political process. Two parties, a politician and a corporation, collude to the benefit of both by using the power of the politician to enrich both. Is there any doubt but that this is the meaning of Solyndra, or any of the other “green energy/jobs” initiatives in which the current administration has invested our precious dollars?
This is ever the purpose of those who extend the meaning of justice from that which it is, to that which it is not. How many plunderers do you know? Are you a plunderer yourself? Before you blanch at the suggestion, consider it carefully: Do the things you may receive from government, directly or indirectly, spring from the plunder of the property and wealth of others? In short, are they yours, in fact, or are they really the property of others bent to your purposes, or so-called “needs?” You need not even have consented to it, at least not knowingly, and yet there you are tied as another perpetrator and victim in this institutionalized plunder. Examine all the ways you are being plundered, but then examine more carefully all the ways in which you plunder others.
You might claim, as most will, that: “I had no choice, and besides, they plundered me, first. Mine is just compensation for an earlier plundering of my property(wealth.)” Let me ask you bluntly then: If your neighbor’s house is robbed, is it thus acceptable for him to rob the houses of his neighbors? You would decry that suggestion, and tell me that “two wrongs do not a right make.” I say to you the same, but that some robberies are given cover of legality does not excuse them. You might say, for instance, that your situation is dire, and having been plundered all these years, you now have no choice but to resort to legalized plunder. Is this your best offering against justice? I am in that stage of life in which I am the constant victim of the plunder, but as a child, I was the beneficiary once too: Did my parents pay directly for my education, or did they rely upon the plunder of their neighbors, many without children, to pay for said primary education? I could offer that I was a child, but then I must admit that my daughter also received a public education for most of her schooling, and I might note that for one child, the taxes I paid might well have been roughly proportional to the benefit, but nevertheless, I cannot ignore the timber in my own eye on this matter. Very few of us have unstained hands.
Yet, even if this is so, that we have nearly all participated to some degree, greater or lesser, does it excuse our continuing the practice? Bastiat thought not. He completes The Law with a brief suggestion, exhorting readers “Let Us Now Try Liberty:”
God has given to men all that is necessary for them to accomplish their destinies. He has provided a social form as well as a human form. And these social organs of persons are so constituted that they will develop themselves harmoniously in the clean air of liberty. Away, then, with quacks and organizers! A way with their rings, chains, hooks, and pincers! Away with their artificial systems! Away with the whims of governmental administrators, their socialized projects, their centralization, their tariffs, their government schools, their state religions, their free credit, their bank monopolies, their regulations, their restrictions, their equalization by taxation, and their pious moralizations!
And now that the legislators and do-gooders have so futilely inflicted so many systems upon society, may they finally end where they should have begun: May they reject all systems, and try liberty; for liberty is an acknowledgment of faith in God and His works.
Whatever else you may say about Bastiat’s work, we must admit he had been thorough, and we must acknowledge the wisdom of his position. He knew what most of our founders and framers had known with respect to the purpose of the law, and why it must be kept to those vital purposes, but permitted no more. In subsequent centuries, we have permitted the law to fall into disrepair, beguiled with promises of plunder, as we have been plundered, but there exists now a burgeoning front of Americans who have never lived by any means but plunder, from cradle to grave, and they expect it to grow and magnify. Politicians, engaged in a different form of legalized plunder, have created this army of plunderers to excuse and offer cover for their own(as detailed by Sarah Palin, Peter Schweizer, and a number of others.) Unless and until the American people recognize that these interwoven systems of plunder are the root cause of most of our discontents, our miseries and our pain, we will continue to suffer them until revolution begets even greater and more perverse systems of plunder. None of us should think ourselves absolved, but let us take Bastiat’s words and restore justice in law. That’s the only way we’ll save our nation.
Note: I would encourage readers to read The Law in its entirety. I’d also encourage you to read Bastiat’s other works, translated here.
Most of us who look around at the economic conditions in the country woke up scratching our heads at the outcome of the election. Under these economic conditions, how could voters fail to reject the party that has created the catastrophe of inflation, skyrocketing energy prices, and mounting food prices? This question seems vexing at first, but it’s really not so difficult to understand. Democrats are professionals at stealing elections, but they’re also professionals when it comes to setting a legislative agenda that will later backstop their political aims. Democrats knew what they were going to do, as far back as the beginning of the pandemic, and what they’ve been doing since was designed to carry it into effect. They’re diabolical, and with respect to inflation, they knew full well what they were going to do. Inflation didn’t matter in this election to their voters. Why? The reason your red wave became a trickle is because Democrat’s constituencies scarcely feel it, at least to the scale working Americans have been feeling it. Democrats undertook a plan to drive inflation while insulating the bulk of their own voters from it.
