I don’t want marriage equality for just homosexual couples, I want it for every consenting adult. What about polygynous and polyandrous groups? Why should the government have to “recognize” marriage and legislate it’s beliefs through the tax code, regulations, and inheritance laws? Why not remove the government from marriage altogether and let people rely on personal contracts and their respective churches/communities for marriage?
The same state nullification that fought for marijuana legalization and gay marriage against federal drug and marriage laws will undoubtedly push back on new gay federal marriage laws, in some states. Everyone is fighting to persuade the power that the government shouldn’t have in the first place. Subsidiarity works here, reduce marriage back down to consenting adults and a contract. Problem solved forever.
Since the 1950s, government student loans and loans guaranteed by the government grew, until they overtook private loans in the mid 1990s. Higher Education was seen as a “Public Good” that should be attainable for anyone. Nobody seemed to notice that, before government involvement, it had been attainable for anyone willing to work a part-time job and throughout the summer. Up until the late 1990s, students could put themselves through college with total tuition falling below 8k for a 4-year degree.
Now, federal loans comprise 90% of all student loans. But at what price?Tuition prices have increased exponentially. Why? The quality of education that my sister received in the late 1990s, compared to myself in early 2000s, and then compared to a friend in 2010, has remained the same.
Simple Supply and Demand
If quality hasn’t increased exponentially, maybe something else is causing the increase. The amount of money chasing a good (college tuition) has gone up from government subsidization (easy federal loans). When demand rises for a limited good, prices adjust upwards. Colleges fill their classes with ease and then use that money to expand student facilities, research labs, dorms, tenure, etc, which will cause an increase in tuition the next year. These added costs lead to tuition hikes that have yet to find a top because of never-ending, federally-subsidized loans. Colleges could raise tuition year over year without expanding and still get away with it.
Take government guaranteed loans, direct loans, and tax write-offs out of the tuition market and you have the same number of colleges competing for a much smaller student pie, at first. What bank would loan someone 27k to become a Musician? Not many. Especially if the student had the ability to default on the loan. Defaults are free market check to gratuitous loaning that the government has removed from from the market. Why would a loaning institution care about your ability to repay if the loan is unable to default?
Reduce Moral Hazard and Increase Accountability
If free market loans were granted, they would have stipulations similar to other loans: required collateral/down payment, display an incoming revenue stream, and/or prove that an entry-level position in the profession could afford the monthly payments. Now extend that to more “prestigious” colleges and ask yourself what bank, without government subsidies or loan protections, would risk 60-100k on any profession that satisfies none of the criterion listed above?
Positive Effects of Removing Federal Financial Tuition Aid
Removing government from the student loan business would:
1) Force colleges to become price-competitive since they can no longer rely on gov’t to loan out their high tuition rates. Many over-sized colleges would become insolvent and smaller, leaner, colleges would be able to enter the market with lower tuition rates. More competition would drive prices down and innovation up, benefiting the consumers/students. Lower tuition would also free up students’ financial resources after graduating, which would be diverted back into the economy. Colleges would be competitive again.
2) Encourage students to go into professions that were valued more by society based on the student’s ability to repay the loan once they enter the workforce. Currently, we have a shortage of engineers and an abundance of humanities and social degrees that are unemployed. Banks wouldn’t give out private loans to a would-be pysch. major if research showed that current psychology grads were suffering from low employment. However, banks would give out loans to engineers since there is a vast shortage driving up wages, and therefore, the ability to repay the loan.
3) Force banks to have loan standards since they could risk a plethora of defaults without gov’t guarantees and government regulation that inhibits students from default.
4) Decrease our taxes that go towards subsidizing and guaranteeing loans, putting our money back into the private sector, who hires the students once they graduate. This would also shrink this sector of the government, putting more money back into the hands of the market.
5) Put the lobbyists of colleges and companies who service bank loans out of a job; diverting their labor back into the free market instead of using it to manipulate gov’t spending power.
6) Stop new students from graduating with an average of $27k in debt that they can never default on, thus creating wage-slaves who have no means to participate in the economy. This was put best by my friend Robert Fitzgibbon:
“Why doesn’t it occur to the pols that the “educational attainment” they champion is ruining more and more lives, forcing what should be the most vital and productive segment of society to forestall home ownership and other once realizable and reasonable aspirations to the archtypical American dream?”
Subsidizing Public Goods Increases the Public Cost
We have seen government subsidize loans in many sectors, and just like with housing mortgages, we’ve had ballooning prices without an equal increase in quality. While technology and innovation should have been driving prices down for tuition, an increased supply of easy loans drove it up. Redistributing the wealth to anything labeled a “public good” will result in the similar consequences. The problem is not only does the price go up, but we’re taxed in a vicious cycle to make up for the price increases that our initial tax subsidies enabled.
Instead, we should use the following criteria for government involvement:
1) We can’t collect user fees for use of the good.
2) The private market can’t supply the good.
3) Federal government intervention is authorized by the constitution.
Taking this path dials back many of the services that we commonly associate with government, allowing them to become price-competitive in a free market system.
Recently, Washington D.C. has 7 of the top 10 wealthiest cities/suburbs in the United States. Private jet hangars sell out in two weeks, Ferrari dealerships can’t keep selling out of their inventory, and corporations are relocating their headquarters within reach of the nation’s Capitol.
Corporations realize that much of their future lies within the concentrated hands of congress, rather than in their customers. It’s really sad because instead of using money to improve upon manufacturing, wages, and service, they are throwing that money at lobbying efforts. When companies reinvest in themselves, the product gets better, prices go down, wages go up, and competition thrives in the Free Market. With Washington’s overextended arms, it seems that corporations are trading the competitiveness of Capitalism for the favoritism of Corporatism.
In the land where Congress exempts themselves from insider trading laws, hiring policies for interns, and has voted to raise it’s wages by 178% since 1990, I don’t think it’s realistic to assume that they will ever vote to limit campaign contributions. Steven Colbert highlighted the facade of donation transparency with his SuperPAC campaign last election cycle.
People say that they want money out of politics. As long as the government has the power to tax and spend your money, you will always have lobbyists and money trying to purchase that political power. Money persuading politics is a symptom, the root cause is politicians increasing power as government grows. Take that power out of Washington, rollback government power, and the lobbying money purchases very little.
So after the election, someone connected the two images together and, all of a sudden, I see it on facebook from 10 different people. It’s funny because nobody who posts it will actually come out and say they think southerners are racists or have the same pro-slavery ideologies as the people who lived in those states in 1846.
So, after nearly 150 years since slavery and 3-4 generations removed, are the people in the slave states and “open to slavery” territories still racist and/or exhibiting pro-slavery ideals that are somehow being displayed in their voting patterns?
“Territories Open to Slavery” = Slave States?
“Territories Open To Slavery” is a nebulous term. It really means that those territories could decide whether to implement slavery or not. Can a territory that is “Open to Slavery” never have actually implemented it? As it turns out, the territories containing these states never had slavery: Nebraska, Kansas, North Dakota, South Dakota, Montana, Idaho, and Wyoming.
Minuscule parts of Utah and Colorado were considered Texas, so those parts had slaves when Texas did. However, after Texas sold those parts for debt-releif, they did not legalize slavery. When Arizona became a state, it also did not legalize slavery.
While we’re on the subject of Territories, it turns out the the initially settled territories of New England operated with slave labor.
Roughly speaking, slavery in the North can be divided into two regions. New England slaves numbered only about 1,000 in 1708, but that rose to more than 5,000 in 1730 and about 13,000 by 1750. New England also was the center of the slave trade in the colonies, supplying captive Africans to the South and the Caribbean island. Black slaves were a valuable shipping commodity that soon proved useful at home, both in large-scale agriculture and in ship-building. The Mid-Atlantic colonies (New York, New Jersey, Pennsylvania) had been under Dutch rule before the British conquered them in 1664. African slavery in the middle colonies had been actively encouraged by the Dutch authorities, and this was continued by the British.
In addition, most of the New England states initially operated with slave labor:
Highlighting “Territories Open to Slavery” is a convenient way to include midwestern states that voted for Romney, even though those states never actually implemented slavery.
If we’re going to include states or territories that were open to slavery, we better include many of New England states.
Why use the year 1846?
Why not start at 1782 and include all of the states listed above? Why not show the evolving map from Wikipedia instead?
(notice the slave states in the North during 1789)
So as it stands, even if we grant the 1846 map, Nebraska, Kansas, Idaho, Wyoming, Montana, North Dakota, and South Dakota definitely don’t fit into the racism narrative. Neither does Alaska. Florida might defect as well since it looks like it will go to Obama. According to the 1846 map, New Mexico should have also gone to Romney because it had legalized slavery as a territory, and according to the narrative I’m disputing, is still racist to this very day.
With eleven states not aligning with the narrative, maybe there is a different explanation? Like Rural vs. Urban? Or maybe different people saw different qualities in the two nominees?
I don’t know why this map is even being entertained.
Also, I’m not sure why Herman Cain was ever in the lead for the Republican nominee. If GOP voters are so racist, how could Cain have polled so high before being taken down by public allegations of sexual misconduct?
Choose Your Republican Demonization
The people who conclude that these maps correlate slavery-ideologity and racism with Repulican Romney voters should try to stay consistent when demonizing republicans.
Republicans are either:
1) Rich business owners who put up large amounts of superPAC money and control all of the evil-corporations in America.
2) Poor, southern slave-enthusiasts with little education.
Perhaps the Republican base is more complex then their opponent’s narrative would suggest?
In the course of the interview Jon asks, “What do we do with the losers that are picked by the free market?”
Answer: We don’t need to do anything with them. The market has weened out those that are not able to provide a product that is worthy of consumer dollars. They failed and are able to try again, learning from their mistakes. Meanwhile, the economic resources that they used in an inefficient manner are released back into the economy (employees, capital, etc.) that can use them for a more effective product.
Jon’s “Collective Society” argument
Then Jon goes on to say, “But don’t we live in a society… where everybody’s success is predicated on the hard work of all of us.” This is a very general statement. How have you, the person reading this, ever contributed to my success? You haven’t. In turn, I haven’t helped your success. What Jon is referring to is the collective that has produced the high standard of living that we are enjoying now; the tools we have to use for our success. What he fails to realize is that he is referring to the spontaneous organization of the Free Market.
People selecting the best product based on value-price and those entrepreneurs thriving while other entrepreneurs fail. When I buy a mobile phone, I do so because I believe the following value proposition: $300 is worth less or is equal to this specific mobile phone that has apps, camera, gps, Y attribute, Z attribute, etc. that is easy to navigate and rarely breaks. I don’t buy items based on the producer of those items not failing. That is not part of the value proposition. If we bailed out the losers we’d still be wasting economic resources on Netscape, AltaVista, Lycos, Friendster, Delorean, Pets.com, Vector Motors, Worldcom, etc. Instead, we’ve saved tax money by not bailing out these companies and then released those resources back into the economy so new and/or successful entrepreneurs could use them.
Jon endorses Gov’t going beyond the confines of the Constitution, if it is “effective”
Jon doesn’t realize that he is endorsing a very slippery slope where we, the people, sit by and let the government pick winners and losers. A slope where the line has already been crossed as we watch lobbying money flow into D.C., making it the richest area per capita in the United States (recently passing Silicon Valley). Restrict the government to it’s Constitutional confines and there will be little power to lobby for.
Understand that we haven’t had free markets in many areas for quite sometime. Healthcare (medicare/medicaid, 1965; AMA given power by the gov’t that caused shortages of graduating doctors), College Tuition, Food and Gas, Housing, Monetary system, the list goes on.
The Free Market delivers
We’ve come this far despite government interference into the free market. For the most part, the gov’t stays out of technology and now you have a cell phone that has a billion times the processing power and a million times as small as the first computer, at a million times less of the cost. Let the Free Market operate.
Money vs. Wealth
Would raising every person’s wages by $500k result in real economic growth? No, it would balloon the GDP, but only it terms of rising prices, not real economic output. The reason is because fiat currency that isn’t backed by any asset (gold, labored-for capital, labor, oil, food, etc.) isn’t a good in itself, it is only a means for people to exchange goods.
Low Interest Rates Precipitate Bubbles
In a bull market with high confidence, artificially low interest rates (cheap money) drive speculation and reduce savings. The Money supply (m3) grew from 10k Billion to 14k Billion from mid 2005 to 2008. Much of that was filtered into housing which caused huge price increases, not real economic growth. After the burst, home ownership remains around the historical 65% mark. When interest rates started to rise, ARMs imploded sub-prime and the rest is history.
Now we have low interest rates with no confidence. The money supply has been growing dramatically since 1997 from 5 Trillion to 16 Trillion. We are seeing inflation, but not hyper inflation because banks are still cautious to loan their reserves. Instead, they are investing back into U.S. Treasuries, which the Fed buys at a premium to keep borrowing costs low, and equities. We’ve seen that QE1, QE2, and QE3finity have done little to stimulate the economy. The problem for return to growth isn’t lack of bank reserves for spending, it’s lack of confidence. The average person in the U.S. (baby or adult) is in $52k of private debt and another 53k in public debt. Banks are rightfully cautious to loan when debt liability is nearly 105k for each person.
Krugman and the Keynesians shaping today’s policy would have us QE endlessly and force massive government spending on infrastructure to spur employment. This strategy avoids the confidence problem entirely. Many would also argue that not only is more government debt-spending not nearly as productive as the private market (government doesn’t operate on a price-profit motive, instead it operates on taxed revenue or debt for future tax-revenue), but it will also undermine our future borrowing efforts with higher debt liability. That is, debt buyers will flock to other assets because of our massive debt load, just as U.S. banks are flocking to other assets because of U.S. consumer debt load. Imagine a $20 Trillion debt at 4 or 5%. Are banks more likely, down the road, to lend money to borrowers who have high personal debt AND skyrocketing public debt liability? Stimulus-centered government spending is part of the confidence problem.
What Krugman, and other Keynesians, are missing is that the economy needs to deleverage before it can regain confidence. We had too much consumptive expansion and now we need consumptive contraction. The free market would have attempted to clear most of the toxicity out, but TARP and Fed bailouts have held up insolvent banking institutions, asset prices, and caused a huge consolidation of wealth by the “to big to fail” banks.
The free market would have let them go bankrupt, which would have resulted in fire-sale auctions in housing and debt. These wholesale auctions would have mitigated many foreclosures as housing prices would have fallen, and been re-evaluated, back to market levels. Mortgages would have been slashed and more defaults avoided. Same goes for the other debt that these banks held. In addition, banks would have learned their lessons and the FDIC would have gone bankrupt. People would have to do a little research into their banks lending practices and competing private agencies would come in to offer insurance; making the banks directly responsible to the depositors and decreasing moral hazard on both sides.
Current Action to Deleverage
What we need to do is have the Fed unwind it’s liabilities, which will contract the reserves out of he primary banking institutions. During the unwinding, we need to raise interest rates to incentive savings (and then let them free float without the Fed). When the banks see their public deposits going up, they will have more confidence to loan because they’ll know the public is saving for future consumption. Banks won’t be able to leverage to crazy limits without raising interest rates to attract more deposits. Because higher rates will stifle outgoing loan rates, consumers won’t be able to blow up speculatory bubbles ad infinum. In fact,the raised interest rates will put a market check on current bubbles.
While this is happening, let wages fall. Since wages are priced into cost of goods, pricing of goods will fall as well, helping us maintain a decent level of employment and standard of living after a major cycle of over-consumption. Falling wages will also bring in more production that was overseas, to offset our previous over-consumption and spur more manufacturing employment. We can’t hope to immediately sustain the high standard of living from overspending that led to this crisis, but taking the medicine now (we’ve already delayed it four years) is much better than delaying it another 11 years. Unfortunately, Krugman is a slave to immediate employment rates, even if it means continually committing the broken window fallacy, injecting banks with capital, and lowering rates ad infinitum. His efforts would do nothing to engage confidence. We’ve seen similar efforts used in the last four years to no avail.
As with the Depression of 1920-21 (one of the sharpest unemployment increases in history) and the never occurring depression of 1946, the best thing the government can do during economic busts is decrease it’s operating revenue while paying down it’s debt. Krugman and the Keynesians would have us do the opposite, which extended the Great Depression for 15 years.
1) Obama policies undermine The Constitution
I didn’t like the Patriot Act. I though it was an invasion of our privacy and it violates the 4th amendment. Obama has taken it a step further with the NDAA. This act authorizes the indefinite detention of U.S. citizens, without trial, without charges or warrant, on American soil, away from any battlefield if need be. This violates the 4th (protection against unreasonable searches and seizures), 5th (due process of law), and 6th (trial by jury) amendment.
Even worse, the Obama Administration continues to legally battle for indefinite detention:
On September 12, 2012, U.S. District Judge Katherine B. Forrest issued a permanent injunction against the indefinite detention provisions of the NDAA (section 1021(b)(2)) on the grounds of unconstitutionality; this injunction was appealed the following day by the Obama Administration.
2) Obama has authorized the killing of American citizens.
Obama’s administration has authorized the drone killing of three American citizens - two supposed Al Qaeda propagandists and terrorists. The third was one of their sons: Abdulrahman al-Aulaqi, a 16 year-old boy who was not accused of being a terrorist and who hadn’t had contact with his father-in-hiding for two years. Two weeks beforehand, his father was killed by a drone. Aulaqi’s death was summed up as collateral damage from another targeting and “bad fathering”. What’s strange is that right after the death, official sources told news sources that the boy was militarized, in his 20’s, in hiding, etc. In protest, his family produced his U.S. birth certificate showing he was born in 1995, along with documents and photos showing that he was just an ordinary 16-year-old kid.
Read the facebook status below
3) Obama has more wars than Bush did.
In 2008, I voted for Obama because I did not think he was an interventionalist or imperialist. I didn’t want more wars after Bush’s old bait and switch following 9/11 with Afghanistan to Iraq. Now, we have drone strikes in Pakistan, Yemen, Somalia, Libya and Afghanistan. We still have 17,000 personnel in Iraq. When Obama drew down Iraq he increased forces in Afghanistan by nearly triple at 100,000. Now it’s down to 68,000; more than double when Obama took office.
How many of these wars/ongoing strikes have you heard about? How many of these actions were approved by congress? The Obama administration claimed that they were not violating the War Powers Resolution in Libya because 1) troops were only there for assisting other UN forces and allied rebels and 2) Drone attacks don’t put troops in harms way. I don’t want troops in harms way. I also don’t want us bombing countries endlessly without congressional approval. Is the President a king? No. His powers need to be checked by Congress, who represents their constituents: the American people. Without congressional approval, the constituents are left out of the process entirely with no congressional recourse during election season. Instead of seeking such approval, Obama defers to the United Nations.
In addition, our estimated end-cost in Libya is 1.1 Billion dollars. So not only can Obama go to undeclared war when there has been no direct attack on the United States (the embassy attack came 18 months after we started bombing Libya; should the blowback now surprise anyone?), but he can also do so without congressional budget checks.
War Powers Resolution:
The resolution was adopted in the form of a United States Congressjoint resolution; this provides that the President can send U.S. armed forces into action abroad only by authorization of Congress or in case of “a national emergency created by attack upon the United States, its territories or possessions, or its armed forces.”
The War Powers Resolution requires the President to notify Congress within 48 hours of committing armed forces to military action and forbids armed forces from remaining for more than 60 days, with a further 30 day withdrawal period, without an authorization of the use of military force or a declaration of war.
I don’t recall any United States emergencies in Libya when we went to get Gaddafi nor any national emergencies while we’ve been bombing Yemen or Somalia.
Bush’s former CIA chief sums it all up:
President Barack Obama has closely followed the policy of his predecessor, President George W. Bush, when it comes to tactics used in the “war on terror” — from rendition, targeted killings, state secrets, Guantanamo Bay to domestic spying, according to Michael Hayden, Bush’s former director of the Central Intelligence Agency and the National Security Agency.
“And so, we’ve seen all of these continuities between two very different human beings, President Bush and President Obama. We are at war, targeted killings have continued, in fact, if you look at the statistics, targeted killings have increased under Obama.” -Michael Hayden
…He said that was the case because, in one differing path between the two presidents, Obama in 2009 closed CIA “black sites” and ratcheted down on torturing detainees. But instead of capturing so-called “enemy combatants,” President Obama kills them instead, Hayden said.
So now we have a President who
This is all from a liberal democrat who shunned executive powers and militarism when he ran for Commander and Chief against McCain.
4) Drone Wars and blowback
When we give our President the power of a war king, we create a world where America is represented by one man’s militarism. Drone strikes kill innocent civilians, sometimes at a rate of 10 to 1. Then we get blowback situations, like the recent embassy attack in Libya, and we conclude that we need more drone strikes. It’s a vicious cycle that will only propagate more outrage against the U.S., more troops in harms way, and more military deficit spending.
The following is an excerpt from guardian.co.uk in an interview with Noor Behram, a photojournalist who has been following the drone strikes in Pakistan.
“There are just pieces of flesh lying around after a strike. You can’t find bodies. So the locals pick up the flesh and curse America. They say that America is killing us inside our own country, inside our own homes, and only because we are Muslims.”
“The youth in the area surrounding a strike gets crazed. Hatred builds up inside those who have seen a drone attack. The Americans think it is working, but the damage they’re doing is far greater.”
The photographs make for difficult viewing and leave no doubt about the destructive power of the Hellfire missiles unleashed: a boy with the top of his head missing, a severed hand, flattened houses, the parents of children killed in a strike. The chassis is all that remains of a car in one photo, another shows the funeral of a seven-year-old child.
Here’s some Pakistan numbers of Obama’s Drone Killings. Of the total, there are 41 high-value targets. If you’re male and not proved to be a civilian, you are counted as a militant.
All actions 2004 – September 30 2012
Total Obama strikes: 294
Total US strikes since 2004:346
Total reported killed:2,570-3,337
Civilians reported killed:474-884
Children reported killed:176
Total reported injured:1,232-1,366
For the Bureau’s full Pakistan databases click here.
Academics from Stanford and New York universities interviewed over 130 survivors, witnesses and experts, which led them to conclude that the ‘dominant narrative’ in the US - that the surgical precision of drones means they are operated in Pakistan with ‘minimal downsides or collateral impacts’ – is ‘false’. Testimony from a number of eyewitnesses also corroborated the Bureau’s own findings – that the CIA deliberately targets rescuers.
To think that the killing and mangling of innocent civilians isn’t emboldening more terrorism is short-sided. For Pakistan in 2010, the year that had the most drone attacks, also had the most suicide bombings.
How would we feel if a foreign country was killing innocent civilians on U.S. soil every time they targeted a terror suspect? I’d be pissed off and want retribution. Especially if it were my family or friends. When you start to read the accounts, you see that it happens all of the time. A missile misses and kills a family in their car. A target is hit but doing so collapses the five surrounding mud houses killing their inhabitants. Obama coordinates all of this from his armchair as though it were a video game. Would we take it so lightly if we were on the other side?
What can you do?
Each party will gladly forgo it’s executive-checking power in order to take credit for the good and not be held responsible for the bad. By all accounts, you’ll hear the same anti-war rhetoric from the Democratic Party and pro-war rhetoric from the Republican Party, but both turn into pro-war policies once the smoke clears. We don’t notice because we’re too busy attacking one side of the coin to realize that we’re all holding the same piece of useless metal.
I remember seeing an excerpt of Judge Napolitano joking in the early 2000s about what would happen if a drone killed a U.S. citizen overseas. Everybody laughed as though it was implausible. Now it’s happened and surveillance drones are flying over U.S. soil. How long is it until one of them is weaponized and kills a U.S. citizen? And what bullshit reason will they feed us when it does happen?
If you want to do something about it, write your congressman, post up on facebook, and don’t be afraid to criticize your own party or join a third party. I voted for Obama in 2008 because I didn’t want neo-con military types running us through more wars. Militarily speaking, I ended up getting four more years of Bush.
A friend of mine posted this on Facebook arguing that Obama was not the worst contributor to the National Debt. He went on to cite Snopes.
The problems with the chart that Snopes analyzed are that it only shows percentages, starts at the arbitrary point of Reagan, and includes a disproportionate amount of Republican years (20) to Democratic Presidential years (11.63 as of the day of this draft).
If we start at the beginning of the 20th century, Democratic Presidents loose the percentage of debt gained because of FDR’s 1048% increase in Debt during his 12 year reign during the great depression. Imagine that bar graphed next to Reagan’s above.
Percentages don’t really mean much in these scenarios because the debt compounds. If a Republican starts with $1 in debt and ends with $1000 in debt, then he increased the debt by 100000%. If a Democrat then increases the debt to $5000, he has increased the debt by only 500% even though he contributed $4000 more than the Republican.
The Republicans contribution to debt: $1000
The Democrats contributions to debt: $4000
So percentages are not something we want to look at. Instead we want to look at the rate of $ in debt added per year. Especially when dealing with more years from one party than another.
If we analyze just the data from the arbitrarily picked point of Reagan, you will find that Republican Presidents increase the National Debt by $412 Billion/yr (20 total years) vs Democrats increase of $595 Billion/yr (11.63 total years, including up to today). That’s 183 Billion/yr more debt from Democratic Presidents (not inflation adjusted).
Obama easily leads the pack at 1482.2 Billion/yr (for 3.63 years) with the next closest being Bush Jr at 612.2 Billion/yr (for 8 years). The fact that Obama has added to the debt at a rate of 2.4 times the next highest offender is scary. Even scarier is that inflation hasn’t had time to skew the results.
So it is correct to think that Obama is the worst contributor to the national debt ever at 5373 billion total in only 3.63 years. Bush Jr is second at 4899 in 8 years. If we draw out Obamas debt to 8 years it would be 11858 Billion, which is more than all of the national debt before he entered office (10627 Billion).
QE3 in effect as of three hours ago. 40 Billion in MBSs purchases a month until “the market looks good.”
That’s right, the Fed just stated that they will keep purchasing these toxic MBSs from banks every month, with no definitive stopping point. Instead of allowing the market to correct itself, Bernanke keeps giving it more stimulus to drive interest rates down in hope of bringing the market to fruition.
Bernanke is feeding the market more of what caused the bubble in the first place. I feel sorry for the guy. He got stuck holding the chair position after Greenspan kept interest rates artificially low in concert with Clinton, and then Bush, pro-housing policies. Couple nearly-free money, with a government policy that promoted lax lending standards and you have a housing boom. Add to that the moral hazard of Wall Street investment banking - knowing that the government-sponsered enterprises (Fannie, Freddie, Ginnie) - will always be bailed out (surprise: they were right!), and you’ve got a housing bubble that’s leveraged 30 to 1.
Instead of allowing for the punishment, Bernanke is rewarding the hazard with more easy money. Where does that easy money flow to first? The same banking and investment banking institutions who doubled down on MBSs in the first place.
How does this affect the Market? Since savings rates are currently so low, people who would have been saving are misallocating their resources to the market to outpace real inflation. The Fed is also recapitalizing banks where money is also funneled directly or indirectly into the market. I see a market that is rising because excessive capital is being artificially funneled into it.
We’re in for a correction either in the market or in inflation, or both. Smart money goes to silver for being the poor man’s gold once the market corrects.
A few days ago, I caught a popular link going around Facebook about the Fed’s last audit that uncovered 16 trillion dollars in loans to both foreign and domestic entities. From the audit:
The first top-to-bottom audit of the Federal Reserve uncovered eye-popping new details about how the U.S. provided a whopping $16 trillion in secret loans to bail out American and foreign banks and businesses during the worst economic crisis since the Great Depression.
For example, the CEO of JP Morgan Chase served on the New York Fed’s board of directors at the same time that his bank received more than $390 billion in financial assistance from the Fed. Moreover, JP Morgan Chase served as one of the clearing banks for the Fed’s emergency lending programs.
This information had been readily available since 2011 but I imagine that the Republican establishment’s integration of the “Audit the Fed” into their platform has fueled many conservative websites to rediscover what the Fed has actually been up to. If you think the “Audit the Fed” platform has any legs, you’re kidding yourself. I view it as a way for the Republican’s to absorb and appease some of the Ron Paul and Tea Party movement.
Fed Manipulated rates vs. Free Market rates
The inflationary recapitalization and Quantitative Easing (increasing the money supply by billions without any vote) is just one way the Fed destroys wealth. The Fed also contributes to the boom and bust business cycle by manipulating interest rates (usually lower) in order to encourage private capital to enter the market. More spending on higher order economic goods such as factories, machinery, and development as well as lower order goods such like housing, cars, and consumer goods.
Low rates would normally be a function of higher savings. Banks would have too much supply (money from people saving) and need to increase demand by lowering the cost of money (interest rate).
In a true free market, low rates “signal” the private business sector that people are currently delaying their purchasing (by saving) and that saved capital will enter the market at a later date. The low rates also make higher order production investments (factory building, etc) much more financially feasible. Considering both factors, the private business sector can invest in higher-level production projects in hopes to grab a share of the to-be-spent dollars that are currently saved. Good companies will get their share and bad companies will go out of business. The point is that there is actually a pie to grab a piece of.
The Fed interferes with the free market by artificially lowering rates when no one is saving. This process sends the false signal that people are delaying their purchasing. The private sector then begins capital investment in higher order production unbeknownst that the economic resources won’t be there to purchase their product in the future. There is no pie to be had and the capital investment has been a waste of resources from the beginning. For this very reason, artificially low interest rates were one of the main contributors to the housing bubble. When the bubble burst, their was no savings to purchase the houses at the inflated prices they were reaching.
Mis-signaling capital to enter the market is only one side of the Fed coin. Artificial rate adjustments not only hurt producers, but also consumers. Manipulated lower rates discourage consumers to save money because the return on their savings is lower than real inflation. This encourages people, en masse, to spend their money or invest in other markets with a greater return. Often times, these markets are driven up by this artificially increased demand. Just as with housing, the bubble grows, and people keep investing as returns keep rising. Like clockwork, a huge bust occurs when resources are unable to meet the insanely high prices that have only been driven to such heights because of Fed manipulation (usually coupled with bad government policy).
Free Market Rates
Let the individual banks set the rates and the Free Market will yield the proper rates without deceiving producers and consumers.
For some time now, the Fed has seen it fit to manipulate rates lower in order to recapitalize banks so they could lend effectively. In a Free Market, banks do this on their own by raising return rates on savings. Once they have enough capital, they can systematically lower lending rates to stay competitive.
With Fed Manipulation, Everbody Loses Except those with Access
With Fed manipulation, the business sector loses, the savers loose, and the banks loose. Actually, that last one isn’t true. The banks have access so they are bailed out and/or recapitalized at the taxpayer expense. Some of the business sector has access or gets lucky so they are bailed out. And then the administration shifts blame or scares the public in order to not look like an accomplice to a system that keeps it fat and benevolent. After all, inflation only starts to really set in once the overprinted money begins to trickle down to the entire population. Those who get the money first, don’t suffer near as much as those who get it last because retail pricing hasn’t had time to adjust higher.
It just so happens, that those who get it first are also the largest banks and corporations who lobby, contribute, and become cabinet members of every administration which chooses to bail out and/or keep this cycle going. So do I think Romney who, like Obama, is financed by many of the largest banking institutions will change the behavior of the Fed? I don’t think so.
Ron Paul Plug
Ron Paul has called this system out for years that the central planning of Keynesian economics would eventually collapse our financial system.