What Hillary Meant To Say Is, “If you like your job, you can keep your job”

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Here comes the spin! Last week millionaire Democrat Hillary Clinton teamed up with populist uber-leftist millionaire Elizabeth “Fauxcahontas” Warren to deliver a zinger aimed at American businesses:

“Don’t let anybody tell you that it’s corporations and businesses that create jobs.”

She’s a Statist. Statists believe only the government can create jobs. (Or Vernon Jordan, if you count creating jobs for Bill’s mistresses.)

We get it, we didn’t build that.

But, after enduring a weekend of ridicule (except on the Big 3 networks of course) The Hilldabeest backtracked, and blamed her “misstatement” on an internet video.

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“Trickle down economics has failed. I short-handed this point the other day, so let me be absolutely clear about what I’ve been saying for a couple of decades,” she said. “Our economy grows when businesses and entrepreneurs create good-paying jobs here in America and workers and families are empowered to build from the bottom up and the middle out — not when we hand out tax breaks for corporations that outsource jobs or stash their profits overseas.”

Yeah, I can see how that mouthful could be easily confused, tongue-twisted even, into “Don’t let anybody tell you that it’s corporations and businesses that create jobs.”

Sure thing Hill. Because, at this point, what difference does it make? We know you’re a godless commie. And you know that we know that you’re a godless commie. So really, stop pretending. Tell us the truth, all the time. We can take it.

The real question is, can you?

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Free Money Ain’t Free

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Census figures show that over a third of Americans are receiving some means tested welfare; i.e., Medicade, food stamps, housing assistance, and other forms of Temporary Assistance for Needy Families as was reported by Fox News in late August. Of course, this is not surprising to anyone paying attention. This so-called recovery which we are told we are experiencing has been very lopsided in favor of the upper income folks and especially the Wall Street crowd. Inflation is low according to the Federal Reserve, but most people are seeing their cost of living go up while income is stagnant or declining. I think it was economist Charles Hugh Smith who said it best a while back: “we are experiencing deflation in things  we don’t need and inflation in the things we do need”. The unemployment rate is falling while the percentage of working age Americans with a job is decreasing. The jobs that are being created these past six years, which the Obama loves to brag about, are not keeping up with population growth and they are disproportionately low-income and/or part-time jobs.

If the politicians and think tanks on the Right have a plan for improving this moribund economy, I’ve not heard it. On the Left, however, “plans” abound from raising minimum wage to guaranteeing a “living wage” to “universal income” to, as reported here at  Asylum Watch, the Council on Foreign Relations (CFR) has written a white-paper proposing that the Fed’s Quantitative Easing program of giving free money to Wall Street be replaced with a program to give free money to the good folks on Main Street. CFR believes this will get the masses spending more and drive up demand, which in turn, will cause employers to expand production and hire more workers. Although the CFR recognizes the inflationary effects of such a program, they believe the Fed could control inflation by carefully increasing interest rates.

But, here’s what the Left doesn’t tell us about their “free money” schemes:

Free Money Ain’t Free!

The Left, of course, never give a moment’s thought to what their give-away programs cost.  I t is worth noting some of these socialist/Marxist are seeing that this peace meal approach is not working and so it is time, they believe, to go all-in and implement a “universal income“, as those at The Week recently did. After a long diatribe on how the policies of the heartless Right only make matters worse and how the policies of the caring Left don’t do enough, they came to this conclusion:

Therefore, one can easily imagine the historical process described by Marx going in reverse. In today’s labor market, where there are still twice as many job seekers as job openings, the constant conservative carping about the “dignity of work” sounds more jarring and vindictive by the day

As someone with a nice, stimulating job, I agree that work can help people flourish. But in an economy that is flatly failing to produce enough jobs to satisfy the need, a universal basic income will start to seem more plausible — even necessary.

Dear friends, you need to take this “free money” talk seriously. As the middle class continues to shrink, this idea is going to gain more traction.

Fortunately for those of us who seek information from alternative sources, there are some very smart people in the blogosphere. That includes my good friend at the Spellchek blog.  (Do yourself a favor and mark his post as a must read!) My friend was inspired by the article at The Week to get out his calculator and put pencil to paper and see what kind of money this idea might entail. He used Switzerland as a base case since they will be voting referendum to provide a universal income of $33,600 per year to their citizens. The using U.S. Census Bureau numbers he began crunching the numbers: (Bold added)

What if we followed the lead of the Swiss and doled out $33,600 per year to each one of us? That equates to over $8.1 trillion dollars annually, just a tad more than the $1 trillion dollar welfare number were arguing about now. With an economy worth an estimated $17.3 trillion annually, a basic income at that level would eat up nearly 50% of everything produced. Except that doesn’t count. Only our federal budget spending does which was only a meager $3.5 trillion last year.

Worse yet, federal revenues were only $2.8 trillion. We borrowed the rest just to spend $3.5 trillion. Can you imagine if we had to cough up $8.1 trillion for a basic income program? In fact, the biggest budget expenditure we have currently is social security at $814 billion last year, or 24% of the budget. A basic income program would be ten times the size of social security.

Redistributing federal budget monies is only a partial solution. Private wealth must be tapped as well (retirement funds anyone?).

This exercise in futility is funny until you realize that so many people are serious about it. I mean, what if we just took the $1 trillion the left claims is pie-in-the-sky and divided that up amongst our 242 million recipients? That’s only $4,124 bucks a year. Think that wouldn’t send the $15 minimum wage crowd over the edge? That’s chump change to them.

The bottom line is that the seemingly eternal quest of the socialists is that spending other people’s money still doesn’t get us to nirvana. If they ever want to get serious about it than the full-fledged approach of communism is the only way. All wealth must be confiscated and handed out to the masses. And we all know how that approach turns out.

Got that? Total federal government spending would be the sum of $8.1 trillion, for the “universal income” and the current spending level of $3.5 trillion, or a total of $11.6 trillion!

Nobody is going to lend US that additional $8.1 trillion, therefore, it will have to be printed, won’t it? So, how high would the Fed have to raise interest rates to keep a lid on inflation? Right! That, as my friend said, leaves communism.

Well, that’s what I’m thinking. What are your thoughts?

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Segregation on Rise in Schools; Need Better Education; Policies Failing

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According to the AP a report by the Civil Rights Project at UCLA findings showed that segregation in schools is on the rise 60 years after the Brown Supreme Court decision. Blacks, Latinos, and other minorities are making up 90 percent of the students in a number of schools in New York, Texas, California, Maryland, Illinois, and Michigan.

The Civil Rights Project found that in central cities among the largest metropolitan areas contain more segregation than in suburban areas.  Do you think as citizens that we segregate ourselves of our own volition? Lower middle class individuals hang round others in the lower middle class?  Upper middle class associate with persons who are also in the upper middle class?  Poor hang around other poor individuals? Wealthy hang out with those who are wealthy?  Two things that probably transcend economics is certain groups or activities and religious communities.

One student in Chicago said that she had to transfer to another school due to hers not offering biology and world studies.  These two classes are needed to graduate.  There is absolutely no reason why a school in a poorer area doesn’t teach all the courses necessary for graduation.  I wonder if any classes being taught at the schools in poor sections of cities can be eliminated to make room for the necessary subjects to graduate?

“Many blame the schools for failing, or teachers, but they never blame the bad policies put in place in schools,” Griffin said. “A teacher can only teach to a certain extent with the resources. It’s the policies put in place that’s failing the students.”

I know teachers’ unions are against vouchers as are most people working in public schools but I believe vouchers would be a good option for parents to send their children to different schools if the school they are going to is failing them or has subpar standards. Charter schools is another option for students to obtain a better education.  Obviously improvements need to be made in schools which are in economically disadvantaged areas.  Policies need to be changed so we don’t fail the students by not giving them the tools they need in order to be successful in life.

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The New World “disOrder” Is On The Horizon: The Orchestrated Decline of America

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America’s world dominance since the break up of the Soviet Union is coming to an end. Pundits will write millions of words debating the “how” and the “why” of America’s fall from grace. To borrow a phrase from our current esteemed leader,  America has been  punching above its weight class, for many years. Our government has spent more than it has taken in for over three decades.

Things took a decided turn for the worse during the G. W. Bush administration. The Clinton administration had the benefit of the inflating Dot.com bubble and the inflating housing bubble and, as a result, managed to balance the budget. The Dot.com bubble burst early in Bush’s first term and the housing bubble burst late in his last term. In between he passed the costly Medicare-Part D and al Qaeda attacked America, which brought us two long, costly, and bloody wars. The national debt went up $5 trillion on Bush’s eight year watch.

Then America blessed itself by electing Barack Obama to two terms of office. His response to the Great Recession was to run up the national debt $5.5 trillion in less than five and one half years and most Americans feel like they are still living in a recession.

So, today we find America funding all of its spending programs, including its vaunted military, by having to borrow 40% of its budget from China, Japan, individual investors, and most recently from the Federal Reserve (The Fed has no money of its own, but it can create money out of thin air). Can anyone really be surprised that America is losing its influence in the world? The world’s most awesome military aside, how can a beggar nation continue to be the world’s “benevolent” policeman? It can not!

America’s decline has been evident to the rest of the world for some time. Many have been the critics of America’s dominate role in world affairs. This criticism worried Harvard history professor, Naill Ferguson, when he wrote a 2004 Foreign Policy article titled, A World Without Power.

Critics of U.S. global dominance should pause and consider the alternative. If the United States retreats from its hegemonic role, who would supplant it? Not Europe, not China, not the Muslim world — and certainly not the United Nations. Unfortunately, the alternative to a single superpower is not a multilateral utopia, but the anarchic nightmare of a new Dark Age.

Now ten years later another pundit writes a very similar opinion. Daniel Greenfield is an Israeli living in New York where he is a professional journalist. He also writes the Sultan Knish blog where you will find his recent essay titled: The Shape of a Post-American World. He starts his essay with this:

The post-American world will be many things, but multilateral isn’t one of them. There will be no world government and international organizations will be good for little except sucking up the last drops of wealth and prestige of the United States. It will be a chaotic place with everyone out for themselves.

And, he ends with this:

The civilized world faces economic, demographic and military crises that it has a limited time frame in which to meet and resolve. If it fails to do that, the civilization in which we have grown up and which we have known all our lives will die and a long interregnum of darkness will follow in its wake.

I do hope you will take the time to read the Greenfield article because, between the two paragraphs quoted above, he offers much food for thought. He talks about the coming of a new world order of China, Russia and the US. He talks at length about the demographic problems facing each of these nations and the general decline of Europe’s influence in world affairs. Greenfield also talks of a fourth power in the world that is not a nation but an ideology and the fastest growing demographic in the world _ that being Islam. He makes the point that, although it would seem reasonable for China, Russia, and the US to see Islam as their common enemy, the leaders of these countries do not see it that way. He use Russia and the US as examples:

… Putin fights some Islamists while incorporating others into his allied clergy and helping still others go nuclear. The United States bombs the Taliban, but would never consider bombing their paymasters in Saudi Arabia, Kuwait and Qatar.

But, the Islam issue aside, Greenfield doesn’t think that China, Russia, and the US will be able to hold their positions of power in the long run. This paragraph comes close to summing up his view point:

Russia, China and the United States are all demographically unstable. Russia and the United States are both on track to become majority-minority countries. China’s demographic disaster will be the outcome of its one child policies, gender abortion and its war on the countryside. The United States will probably weather its demographic problems better than Russia or China, because the former faces a fatal Muslim demographic takeover and the latter a conflict that will tear its society apart, but like Russia and China, the demographic crisis in the United States will be exacerbated by the lack of common bonds to see it through a period of social stress.

Clearly Mr. Greenfield’s view is as dark today as that which worried Professor Ferguson in 2004. What do you think of Mr. Greenfield’s view of a post-American world? That America is losing its hegemonic role in the world seems obvious. It’s just as obvious that China and Russia will expand their spheres of influence both individually and jointly (Middle East). The big question to me is not the demographic issues raised by Mr. Greenfield but rather: will the leaders of China and Russia be wise enough to expand their spheres of influence without bringing down the fragile international financial system?

And I was so sure that my tour of duty in this life would end before the SHTF. Silly me!

Well, that’s what I’m thinking. What are your thoughts?

Original Post:  Asylum Watch

Note From Matt:  Jim is back after a brief absence, and we are glad to have him “back in action.”

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Paul Krugman Advocates for “non-existent” Death Panels Again

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If you recall, Paul Krugman, the uber-liberal economist that never met a stimulus he didn’t like, was caught supporting “death panels” on the This Week Program.  That was in 2011.  Well, he was caught again. Doug Ross (no relation) and Weasel Zippers have the details…

I’m guessing that Sparky McEnron didn’t realize he was being videotaped:

Eventually we do have a problem. That the population is getting older, health care costs are rising… there is this question of how we’re going to pay for the programs. The year 2025, the year 2030, something is going to have to give

We’re going to need more revenue… Surely it will require some sort of middle class taxes as well… We won’t be able to pay for the kind of government the society will want without some increase in taxes… on the middle class, maybe a value added tax…

And we’re also going to have to make decisions about health care, doc pay for health care that has no demonstrated medical benefits.

So the snarky version… which I shouldn’t even say because it will get me in trouble is death panels and sales taxes is how we do this.

Note that he’s following the old liberal policy of “calling it something else.”  You see, it won’t be a death panel, because they’ll call it something else!

Oh, and by the way, if you’re an Obama voter, and you, or one of your loved ones gets their plug pulled by ObamaCare, just remember that  you voted for it.  Elections have consequences.

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Let’s Cut Our Way to Prosperity- Again

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Obama said in his weekly address to the nation that

“We all agree that it’s critical to cut unnecessary spending,” Obama said. “But we can’t just cut our way to prosperity. It hasn’t worked in the past, and it won’t work today.”

President Obama is wrong, and this incorrect logic and ignorance of history is leading him to make wrong policy decisions today. We can cut our way to prosperity and it has worked in the past- in fact, it has worked a lot better than efforts in the past to spend our way to prosperity as Obama is suggesting we do. To demonstrate this, let’s compare the economic recessions of 1920 and 1929.

In 1929, our economy went into a severe recession. President Hoover responded to this recession by implementing a very active policy response, which included vastly increased spending by the national government, increased taxes especially on the evil rich, increased regulation of businesses, bailouts for banks and for ‘too big to fail’ companies, increased support for labor unions, and the creation of dozens of more government agencies and boards to organize and improve our existing economic system. The results of these policies were a longer and deeper recession.

In 1932, President Roosevelt campaigned to end these policies but when he became President he took Hoover’s policies and made them even bigger, more expensive, more spending, and wider reaching. And the results of those policy decisions were a double-dip recession in 1937.

In 2009, President Obama and a Democratic Congress enacted these very same policies- attempting to spend, regulate, control, tax, and spend their way out of the 2009 recession, and the results of these policies have been to lead to a slower and shallower recovery and now as seen in the latest economic numbers are leading to the coming double-dip recession in 2013 or 2014.

President Obama is not really committed to cutting unnecessary spending, is not trying to cut our way to prosperity, and is attempting policies that have not worked in the past and won’t work today.

In 1920, our economy was hammered as it had never been hammered before- a GDP decreased maybe 7%, the US dollar deflated up to 18%, unemployment jumped 6% in one year, productivity plummeted 29.4%, stocks fell dramatically, and the recession was so bad that many in society began to question the stability and future of the American system of capitalism. President Harding ignored the advice given to him by Secretary of Commerce Herbert Hoover and responded to the recession by drastically cutting government spending, quickly cutting regulations, cutting various bureaucratic boards and agencies, and slashed taxes on all incomes. His aggressive implementation of the very policies that President Obama rejects and says “haven’t worked” resulted in our economy quickly emerging from the recession and roaring throughout the 1920’s.

The policy response of limited government, balanced budget, low taxes, low regulation, and unleashing of human freedom led to the Roaring Twenties, which was an amazing period in American history of social, artistic, and economic dynamism. These results are markedly different from the results of an active government, increased taxes, massive government spending, and more regulation that were implemented by progressive Hoover and liberal Roosevelt which led to stagnation and human misery of the Great Depression.

President Obama, ignorant of the history of America and failing in his use of logic, is wrong- President Harding demonstrated that so to marked effect in 1920 and President Hoover demonstrated it so again in 1929. Economic recessions are worsened and lengthened by a government that takes away human liberty, treats people as numbers to manage, takes wealth and property from those who have earned it, and that in every other way violates the Founding Principles of our nation which included limited government, federalism, and separation of power.

Let us educate him and others on the history of economic policy in our nation- whether it be the Panic of 1907 which was ignited by antitrust actions and increased regulation of the railroads, or the Long Depression of 1873–79 which was caused by the failure of government supported railroads and the manipulation of the money supply by the government, or any other recession that has struck the United States before or since. We need to be educated and then in turn educate our politicians like President Obama, because driven by their ignorance and poor logic they are busy implementing the very policies which will lessen your life, liberty, and your prosperity.

This post drew on earlier posts of mine, including Lessons from Economic Recessions II- The Forgotten Recession of 1920 and Lessons from Economic Recessions- Introduction and Great Depression.

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What Recovery? Part I: Velocity of Money

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The recession officially ended in 2009. Government reports tell us that the United States has been in recovery for four years now. The vast majority of Americans don’t feel as if they experienced any recovery. Is it because the rate of economic growth has been the slowest in US history? Shouldn’t the average American feel some benefit from an average GDP growth of 2%? Unemployment is the same today as it was in 2009. Why? The Federal Reserve  has used a policy called Quantitative Easing to pump trillions of dollars into the economy over those four years.  At the same time, the Fed has maintained a Zero Interest Rate Policy (ZIRP). Federal Reserve Chairman, Ben Bernanke, has said on numerous occasions that these policies are designed to help the economy grow faster by providing low-interest loans to home buyers and businesses, which would in turn cause businesses to invest and, thereby, create jobs.

Well, job growth is not keeping up with the number of people who have dropped out of the workforce nor with the number young people entering the potential workforce. So, where is all of that QE money. After all, through its QE policy, the Fed has created and put over $3 trillion into a $15 trillion economy. Adding 20% to the economy must be showing up in somebody’s pocket, right?  And, why do most Americans not feel the 2% growth in the economy?

To answers those questions, we need to understand some terms used in analyzing economic data. So, let’s se if we can get a handle on three terms: Gross Domestic Product (GDP), Money Supply, and Velocity of Money. We are going to see that Velocity of Money tells us more about the economy than the GDP does.

Gross Domestic Product (GDP)

The GDP is calculated by summing consumer spending with government spending and business investment spending plus the difference between exports and imports. If exports exceed imports, there is a positive impact on the GDP calculation. The opposite is true if exports are less than imports. Not all economist agree that exports and imports should be part of the GDP calculation, but that the subject of another post some day. We must deal with GDP as it is calculated. To repeat:

GDP = Cons. spending + Gov Spending + Bus Investment Spending + Exports – Imports

Currently, the United States GDP is about $15 trillion. Government spending, under the Obama administration, has been about 25% of GDP. Unfortunately, the governments income has been only about 18% of  GDP, which is why the national debt is now over $16 trillion.

Money Supply

In economics, the money supply or money stock, is the total amount of monetary assets available in an economy at a specific time. In the US the money supply depends on how it is defined. We will look the two most common, M1 and M2, and  a lessor known way of defining the money supply called MZM.

M1 Money Supply: When economist refer to M1, they are talking about  all the notes and coins in circulation plus travelers checks, demand deposits, and other checkable deposits.

M2 Money Supply: The M2 money supply includes M1 plus savings deposits and Time deposits less than $100,000 and money-market deposit accounts for individuals.

MZM Money Supply: The MZM money supply includes M2 plus all money market funds.

Because MZM money supply is the broadest measurement of the money that is easiest to use in economic activity, we will use MZM for our discussion of money velocity. But, first we need an explanation of what money velocity is and why is important to us.

Money Velocity

Joshua Kennon helps understand the velocity of money.

The velocity of money is one of the most important economic concepts you can ever learn.  It isn’t perfect, and it doesn’t fully capture vital influences on the way a nation’s money supply behaves as driven by behavioral economic considerations such as mass panic, fear, overoptimism, et cetra, but it does have very important implications for determining an appropriate taxation policy to generate the optimal amount of governmental revenue from the population.  This is meant to be a very basic, simplified explanation so beginners can grasp the velocity of money, and how it interacts with the so-called Laffer Curve.

What Is the Velocity of Money?

Simply defined, the velocity of money is a measure of the economic activity of a nation.  It looks at how many times a unit of currency ($1 in the case of the United States) flows through the economy and is used by the various members of a society.

All else equal, the faster money travels (the higher the velocity of money) and the more transactions in which it is used, the healthier the economy, the richer the citizens, and the more vibrant the financial system.  The velocity of money tells you how efficient $1 of money supply is at creating economic activity.

In simple terms, the velocity of money of money velocity is equal the GDP of an economy divided by the money supply. And, the more times money circulates through an economy, the higher will be its GDP for the same supply of money. Mr. Kennon gives a very simple example of an economy of only three people where there is no government spending or business investment spending or exports or imports to worry about.  Let’s take a look.

Imagine that a farmer, a grocer, a doctor, and a scientist live in the world’s smallest country.  Between all of them, they have $1,000 in money supply.  Over the course of a month, the following transactions take place:

  • The farmer sells $500 worth of food to the grocer.
  • The grocer marks up the price and sells $700 worth of food, split among the doctor and scientist who are his two customers.
  • The grocer falls and hurts his knee.  He goes to the doctor and pays $200 to the physician.
  • The scientist needs fertilizer for an experiment.  He goes to the farmer and pays him $300.
  • The physician is working on a liquid band-aid product with the scientist.  He pays him $300.

The total value of the transactions in our time period is $2,000.  We have $1,000 in money in our economy, so the velocity of money is 2.

In this little example the GDP was the consumer spending or $2000. The money supply was $1000. When the GDP is divided by the money supple, we see that the velocity of money was 2.0. If we had our three person economy do many more transactions with each other, we could get the money velocity up to 3.0 or even more. They would be enjoying a very rapidly growing economy (GDP).

In this example, the money supply was fixed over the time frame of the analysis. Things get more complicated when the money supply is constantly growing. When banks use fractional reserve accounting, they create credit and ,thereby, the amount money in circulation. Also, when the Federal Reserve uses Quantitative Easing to buy mortgaged back securities or US Bonds with money they don’t have, they are effectively creating money. Since they started QE, they have created over $3 trillion in just the last four years. So, let’s look at how America’s money supply *MZM) has increased over time.

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Graph of MZM Money Stock

We see that the broadest form of easily available  money, MZM, has increased from less than a trillion dollars in 1980 to nearly twelve trillion in early 2013. If you are interested, you can look at the growth of the M1 money supply here and M2 money supply here. The patterns are much the same.

The Federal Reserve in Saint Louis also has a graph of what the velocity the MZM  money supply over time. Here it is.

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Graph of Velocity of MZM Money Stock

We see that except for a spike in the velocity of money in the early 1980?s, the velocity was a fairly constant 2.5 from 1975 to 1995. Since then it has fallen to about 1.4 in January of this year. That, my friends, explains why most Americans do not feel that the economy is getting better. The GDP is growing, but the money supply is growing even faster. This trend started, however, not in the Obama or the Bush presidencies; but in the Clinton Presidency. According to this graph the velocity of money is now much lower than it was in 1960. But, this article has the same graph going back to 1920 and the current velocity of money, at 1.4, is worse than the years of the Great Depression and World War II. Are you beginning to understand just how bad our economy is today?

But, wait a minute.  Something doesn’t jive. The S&P 500 index is back to 1400; regaining its loses from the 2008 financial collapse. Look at what this CNBC article says:

The stock market has gone from wealth destroyer to the nation’s largest manufacturer of new millionaires and billionaires. The market moves are creating a new virtuous cycle of confidence for the wealthy. A new survey from Spectrem Group shows that millionaire confidence in the economy hit the highest level in two years, led by their bullishness on the economy and corporate earnings.

Corporations and the big banks are making big profits and paying management big bonuses. Wall Street investors are doing well, aren’t they. The Feds velocity of money graph doesn;t tell the whole story. The graph is an aggregate for the entire economy and doesn’t show what is going on with different segments of the economy; such as, the part made up by big corporations and banks and big Wall Street investors. That segment of the economy is doing very well. The velocity of money they are seeing is much higher than the aggregate 1.4. And, that of course means that the velocity of money you are experiencing is less than the aggregate 1.4. In fact, most people on Main Street are probably experiencing  a velocity of money of less than 1.0, which explains why the folks on Main Street, you and I, are not experiencing the same recovery as the big boys.

So, do you now understand why the income gap keeps growing at an accelerated rate? The Fed’s efforts to stimulate the economy by printing money Quantitative Easing has done nothing to reverse the trend that started in the Clinton era. WHAT IS GOING ON!

In Part II, we will investigate further why the economy for the middle class appears to be in systemic decline. We will also look at what a pessimistic pundit has to say about structural changes in our economy that mean high unemployment will be the norm, for the foreseeable future. But, in Part III, we will look at what an optimistic pundit has to say about increasing freedom and innovation in the world, which he says will be positive for the United States.

Well, now you know what I’m thinking. What are your thoughts?

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Liberal Education Creates Dumb People

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It wouldn’t come as a surprise that people that go to universities tend to be liberal.  And, considering that they are liberal, they must live in economic la-la-land.

And, it is true, as proven by Bookworm…

One of the things that made the rounds on my Facebook was a boastful poster saying that those states with the highest number of college-educated people all went for Obama.  The implication is that these smart Blue State people, unlike the ill-educated yahoos in Red States, are the ones who have the brains and ability to understand how Obamanomics will serve America.

What the genius who created this poster missed the fact that these smart Blue States are, not coincidentally, almost all broke.  Thus, of the list above, the following Blue States are amongst those states running the biggest budget shortfalls in America:  VirginiaNew JerseyNew YorkVermontMassachusettsMarylandNew Hampshire, and Minnesota.  In other words, 80% of the “best educated” states are in dire financial straights.  You’d think that, with all those smart people, they’d be rolling in the green stuff.

It turns out that one of the biggest indicators of Blue state-ness isn’t smarts — it’s brokes.  Here’s the list of the states Obama won, with the ones that have more than a 10% budget shortfall marked, appropriately enough, in red:*

California
Colorado
Connecticut
Delaware
Florida
Hawaii
Illinois
Iowa
Maine
Maryland
Massachusetts
Michigan
Minnesota
Nevada
New Hampshire
New Jersey
New Mexico
New York
Ohio
Oregon
Pennsylvania
Rhode Island
Vermont
Virginia
Washington
Wisconsin

It’s striking that, of the 26 states that gave their electoral votes to Obama, 84% are in debt.  (The perpetually broke District of Columbia also gave its vote to Obama, raising to 85% the number of broke jurisdictions that went true blue.) You’d think that, with all those smart people floating around, they’d manage their money better. In a way, you could say that the Blue States are actually Red States, given their financial hemorrhaging.

By the way, given that we’re still in a recession, it’s true that many Red States are also in debt.  Still, there’s no doubt that the Red States are managing their money better than the ones filled with all those educated Progressive geniuses:

Alabama
Alaska
Arizona
Arkansas
Georgia
Idaho
Indiana
Kansas
Kentucky
Louisiana
Mississippi
Missouri
Montana
Nebraska
North Carolina
North Dakota
Oklahoma
South Carolina
South Dakota
Tennessee
Texas
Utah
West Virginia
Wyoming

As you can see, only 41% of the “dumb” Red States are seriously in the red.  They may not have the degrees, but they have sufficient smarts to control their budgets — which is the fundamental responsibility of all viable governments.

So, for all of the alleged knowledge and wisdom in the blue states, it seems that they have great difficulty balancing their checkbooks.  Or, as Reagan said…

I would strongly recommend heading over to bookworm to read the remainder of the post there. It is well done and thought provoking.

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Restoring Liberty Should be Our Number One Priority

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During the recent election most people listed the economy as their number one concern and that it should be a top priority for the next administration.  The reason people prioritize the economy as their main concern is because they can feel it.  Like the nauseating smell of cigarettes smoke, people feel the negative effects of a faltering economy.   It has an immediate and direct impact on their lives and impedes their ability to pursue happiness because there is little to no opportunity.  So it’s a natural thing for people to desire stronger economic conditions because it creates an opportunity rich environment. It establishes a basis for financial and economic security.  And it enhances and improves the individual condition.  If only people would connect the dots and realize that liberty is the foundation that economic freedom is built on.

The problem is most people do not understand the relationship between liberty and economic freedom.  This is why we tend to ask all the wrong questions to our candidates when they’re running for office.  The first thing we want to know is what they’re going to do to create jobs and boost the economy.  This is the wrong question.  We should be asking what they will do to restore liberty.  The truth is unless the candidates we support take steps to strip away the regulations that have restricted the liberties of the individual and small businesses we will not see the robust recovery we so desire.  Liberty is the foundation that creates economic freedom leading to job growth and prosperity.  So restoring liberty should be our number one priority.  But again for some strange reason people can’t wrap their brains around this relatively simple concept.   Perhaps the reason is because many view the two as separate issues; but they are not.  Using mathematical terms economic freedom and liberty are directly proportional.

As our economic freedom increases, so do our liberties.  As economic freedom decreases our liberties decrease.  It’s that simple.  Still so many look towards an all-powerful government to solve their problems.  They look for candidates who make empty promises about creating jobs yet in end will do nothing to restore liberties because they’re in the pocket of some special interest group that helped write the liberty stealing regulations to put their competitor out of business.  North Dakota is not experiencing an economic boom because of the discovery of oil in the Bakken Oil Fields.  North Dakota is experiencing its economic boom because of less regulation.  Fewer regulations mean more liberties and more liberties leads to economic freedom and prosperity.  This is the secret behind North Dakota’s success and why they have set up safe guards to thwart any attempt by the federal government to regulate oil operations on private property.  Once again there is no secret formula or hidden code to create the conditions that will lead to economic prosperity.  It all has to with restoring liberty.  And before this happens on a national level, it must first occur on the state level.

This in my opinion is where we must focus our efforts the next few election cycles.  There is no political solution for our economic woes that will come out of Washington.  The solutions to our problems are closer to home in local politics.  Once we turn it around at the state level, the national will follow.  The reason I say this is because all of those who represent us on the national level are grown at the state level.  Start electing local candidates who promote the restoration of liberty as their number one priority and everything will change.  The constitution will become the law of the land again.  States will begin to push back against their federal masters and federalism will be restored.  Economic prosperity will return.  And America will once again become a beacon to the world.

LIBERTY forever, freedom for all.

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Pain is a powerful motivator

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If you believe polls, most show President Obama with a slight edge over Mitt Romney going into the debates.  This edge has left many pundits scratching their heads wondering how Obama can even be in this race.  After all he has presided over one of the worst economic recoveries in our nation’s history.  Unemployment has been over eight percent for three and a half years, we have lost our triple A credit rating, slipped from first to seventh in global competitiveness, increased our national debt by $6 trillion with nothing to show for it, lost 662,000 jobs to China since 2008, and the list goes on and on.  Jimmy Carter presided over an economy that had in average unemployment rate of 5.8 percent in 1979 and lost big to Ronald Reagan.  So how can President Obama even be in this race with these horrible economic stats?  The answer in my opinion is simple.  When people don’t feel the pain of the above economic numbers they have no desire to change the current course.

Here’s what I mean.  When I was in Pennsylvania a few weeks ago I ran into a large number of people who were out of work, collecting some type of assistance.  They had enough money for food, rent, cable TV, cigarettes, beer, and all the time in the world to enjoy it.  When I asked them who they were leaning towards in the 2012 election, overwhelmingly they supported reelecting Obama.  This shouldn’t surprise anyone.  They’re not feeling the pain of this terrible economy.  Like a drug, they’re high on entitlements and nothing else matters.  They don’t care about the national debt or the high unemployment rates because it doesn’t impact them.  They don’t care about QE3 because they don’t understand it and have little desire to understand it.  They don’t care where the money is coming from, just as long as the checks keep coming.  They have zero motivation to change their condition because all their basic needs are being met.  So why would they support any candidate that threatens their lifestyle.  The answer is they won’t.  Now multiply this same scenario across the country and a picture begins to come into focus as to why Obama is still in this race.

This is not like the Jimmy Carter economy.  Back then people were actually feeling the pain of a bad economy and they had a strong desire to change their condition.  They wanted to work and knew that work was an avenue that would improve their condition.  They weren’t buying what Jimmy Carter was selling because they were dealing with the reality of his economy every day.  They were feeling the pain of inflation and the falling dollar and pain is a powerful motivator.  Today the pain is being felt by those who go to work every day trying to stretch a devalued dollar to make ends meet.  They pay taxes that are redistributed to another segment of society that pays little to no taxes and lives off the system.  These are the people who feel the pain at the pumps as more of their hard earned money siphoned from them and transferred from the private sector to the government.  Those who do not feel any of the above pains and live off a system that is on the verge of collapsing simply do not care about changing the course.  And the sad truth is that there are a great number of people living off the system; a system that relies on dependency and one that President Obama helped cultivate.

I do believe smoke and mirror tactics will only work so long for Obama.  Lying in campaign ads will catch up to him because eventually he will run smack into the economic reality he has created for all of us and that reality is painful.  And like I said pain is indeed a power motivator.  Use it against him on Election Day.

Liberty forever, freedom for all!

Original Post:  The Sentry Journal

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2012 Turning Into Battle Between Successful American and Bankrupt European models?

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Some of you probably don’t enjoy the ‘Obama everyday’ approach that some blogs have adopted, and I have also struggled with this, but the truth of the matter is that this Presidential campaign is increasingly becoming a story between two opposing forces and a good storyteller (me) should always focus on the main characters in that battle.

The battle lines have been drawn up.

On one side is President Barack Obama, who has taken the lead in the new-look Democratic Party and is being followed by assorted people like Senator Stabenow and Congresswomen Nancy Pelosi. He has declared war on ‘the rich’- those who are successful and make money or those who own small businesses or those who own family farms- and has stated that the purpose of the state is to redistribute wealth to those who he favors, whether they be union bosses or green investors or Hollywood elite. Democrats reluctantly follow him, wary of his radical nature and tired of his continual divisive campaigning, but he does control the political power right now in our nation- as he tweeted recently, he currently fills the chair in the White House and is going to do everything in his power to keep filling it. This new-version Democratic Party looks to Europe for inspiration on a range of policy issues, from welfare to healthcare, and believes that the entitlement/welfare state needs to be increased in these difficult times even if there is no money to pay for this sort of reckless expansion.

I focus mainly on President Obama because he is the main character, but in reality he represents a bigger group of people and a timeless desire- he is the face of those who wish to empower political elites to control others, control their wealth and prosperity, and direct their lives. His sort has been around forever, and for most of human history his sort has been in political control, and around most of the globe his sort is in control today. Even if President Obama is defeated in 2012, the struggle will continue, although the face of it will surely change as Obama rides off into the sunset of taxpayer-paid retirement, golf, and expensive speeches of a bitter and resentful sort.

On the other side apparently is the GOP nominee for President Mitt Romney, who has emerged from a spirited round of debates about the future of our nation to win the nomination for his party and be its standard bearer in 2012. Romney picked Paul Ryan as his VP and surrounded himself with convention speakers like Congressman Marco Rubio and Governor Susana Martinez. At the convention we heard him double-down on important themes like ‘we did build that’ and ‘we can do better’ and ‘we believe in America’, promising to support small businesses, the middle class, manufacturing, and energy producers with less regulations and lower taxes. He believes that the purpose of the state is to protect peoples’ lives through a strong military and a secure social safety net- one that is not going bankrupt and in danger of collapse-, that the state should protect private property, and that people should be more free to make choices on issues such as healthcare. Republicans follow him, but are cautious in doing so, because they’ve been promised these sorts of things before and then were led astray by moderates and RINO’s, and the GOP today is a large and diverse political party filled with sometimes passionate oppositions. This Republican Party looks very much like the party did in the 1980’s and 1990’s, and one imagines that if Romney and the Republicans were to win power in 2012 that they would go about attempting to implement many of the important reforms that are needed to secure a better future for our nation.

I’m not the only one to pick up the emerging broader themes in this campaign- across the pond they’ve noticed it too. In the Telegraph on Sunday, British reporter Janet Daley wrote in We should tune in to the Romney and Ryan show: The myth of a democratic socialist society funded by capitalism is finished:

…Whatever the outcome of the American presidential election, one thing is certain: the fighting of it will be the most significant political event of the decade. Last week’s Republican national convention sharpened what had been until then only a vague, inchoate theme: this campaign is going to consist of the debate that all Western democratic countries should be engaging in, but which only the United States has the nerve to undertake. The question that will demand an answer lies at the heart of the economic crisis from which the West seems unable to recover. It is so profoundly threatening to the governing consensus of Britain and Europe as to be virtually unutterable here, so we shall have to rely on the robustness of the US political class to make the running.

What is being challenged is nothing less than the most basic premise of the politics of the centre ground: that you can have free market economics and a democratic socialist welfare system at the same time. The magic formula in which the wealth produced by the market economy is redistributed by the state – from those who produce it to those whom the government believes deserve it – has gone bust. The crash of 2008 exposed a devastating truth that went much deeper than the discovery of a generation of delinquent bankers, or a transitory property bubble. It has become apparent to anyone with a grip on economic reality that free markets simply cannot produce enough wealth to support the sort of universal entitlement programmes which the populations of democratic countries have been led to expect. The fantasy may be sustained for a while by the relentless production of phony money to fund benefits and job-creation projects, until the economy is turned into a meaningless internal recycling mechanism in the style of the old Soviet Union.

Or else democratically elected governments can be replaced by puppet austerity regimes which are free to ignore the protests of the populace when they are deprived of their promised entitlements. You can, in other words, decide to debauch the currency which underwrites the market economy, or you can dispense with democracy. Both of these possible solutions are currently being tried in the European Union, whose leaders are reduced to talking sinister gibberish in order to evade the obvious conclusion: the myth of a democratic socialist society funded by capitalism is finished. This is the defining political problem of the early 21st century.

Mitt Romney had been hinting, in an oblique, undeveloped way, at this line of argument as he moved tentatively toward finding a real message. Then he took the startling step of appointing Congressman Paul Ryan as his running mate, and the earth moved. If Romney was the embodiment of the spirit of a free market, Ryan was its prophet. His speech at the convention was so dangerous to the Obama Democrats, with their aspirations toward European-style democratic socialism, that they unleashed their “fact checkers” to find mistakes (“lies”) in it. (Remember the old Yes Minister joke: “You can always accuse them of errors of detail, sir. There are always some errors of detail”.) When Romney and Ryan offer their arguments to the American people, they are, of course, at an advantage over almost any British or European politician. Contrary to what many know-nothing British observers seem to think, the message coming out of Tampa was not Tea Party extremism. It was just a reassertion of the basic values of American political culture: self-determination, individual aspiration and genuine community, as opposed to belief in the state as the fount of all social virtue. Romney caught this rather nicely in his acceptance speech, with the comment that the US was built on the idea of “a system that is dedicated to creating tomorrow’s prosperity rather than trying to redistribute today’s.” Or as Marco Rubio put it in his speech, Obama is “trying ideas that people came to America to get away from”.

So it would be deeply misleading to imply that this campaign will be a contest between what Britain likes to call “progressive” politics and some atavistic longing for a return to frontier America where everybody made a success of his own life with no help from anybody but his kith and kin…

…But in the course of this campaign, however it concludes, we are all going to get an education in what it might be possible to say if economic reality was actually confronted. Mr Ryan wound up his acceptance speech for the vice-presidential nomination with the chorus, “Our nation needs this debate. We want this debate. We will win this debate.” Some of us would like to have that debate here. We even think we might have a chance of winning it.

As a teacher, it is my job to help inspire critical thinking and debate so that we may all learn the truths and facts of this world- and I am glad that 2012 has become less of a fight for political power and more of an election about principles and a discussion of what truly makes America great.

Original Post:  A Conservative Teacher

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May Economic Numbers Discouraging: Will Team Obama Create Another Social Issue to Distract From it?

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Once again, the monthly economic numbers represent a disappointment.  The Blaze has more…

U.S. employers created only 69,000 jobs in May, the fewest in a year, and the unemployment rate ticked up.

The dismal jobs data will fan fears that the economy is sputtering. It could also damage President Barack Obama’s re-election prospects. And it could lead the Federal Reserve to take further steps to help the economy.

The Labor Department also said Friday that the economy created far fewer jobs in the previous two months than first thought. It revised those figures down to show 49,000 fewer jobs created. The unemployment rate rose to 8.2 percent from 8.1 percent in April, the first increase in 11 months.

Now, excuse my sarcasm, but the Obama administration has two options…

1.  Blame the Republicans, the Tea Parties, some natural disaster-ANYTHING.  Because, we know that in every leftist regime or organization, when there is a failure, it’s ALWAYS someone else’s fault.

2.  Numbers?  What numbers?  Did you know that the Republicans want to freeze/starve/kill all the poor children/elderly/women?  

Of course, the MSM will tow the line, but we all know that this will fail.

Linked at What Would the Founders Think?  Thanks! 

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Content with Caligula’s Coin

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It is the nature of man to try and get as much as he can in reward for as little effort as possible.  This same drive, practiced in two separate ways, can define two distinctly different people.  On one hand, the desire to get much for little can spur a responsible fiscal business person to stay ahead of his competitors in a capitalist market place.  One the other hand, it can push one to the street with open but idle hands.

Politicians know the power behind these two distinct groups.  The former is courted for the power of their money and influence; the latter, for the power of their numbers and open schedule.  Few will make it very far in politics without one of these groups supporting you.  Wooing both would be ideal, but they are counter weights on the scale of partisan power.  You must choose a side, abandon both, or fool both of them into think you are their official.

Caligula wasn’t a fan of his predecessor Tiberius (few were) in Rome.  When Tiberius died (likely helped along by the hand of Caligula), he began to reverse the policies and practices of Tiberius.  As disgusting a human as Tiberius was, he was fairly successful as emperor and secured a very substantial treasury.  Having this monetary security, Tiberius began to pursue the former of that second group – the commoner (That is not to say that commoners are all lazy public leeches – most are hard-working self-sufficient individuals.  I am simply using the term out of convenience.).

Caligula was known to throw money out to the people for weeks at a time.  He would use the treasury to assist people who had lost their homes in disasters, build giant public buildings for games and events, and throw extravagant banquets to celebrate his reign.  That isn’t to say that he was a commoner himself.  He used those same funds to build two of the largest vessels and most extravagant party barges in the world, and threw them in Lake Nemi for his pleasure.  He built a temporary bridge with pontoons across the Bay of Baiae just to flaunt himself (and to defy a soothsayer).

His generosity with the empires money, however, made him a hero among the masses.  His policies began to center around gaining their support.  He increased the pay of the empire’s employees, instituted democratic voting (thumbing the face of the republic), and threw a lot of money into public gestures.  Philo tells us that he had thrown the entire front row (which is where the wealthy Romans sat) into the arena to be killed by the animals – much to the pleasure of the poorer individuals.

It is no surprise that his money ran out.  The public hero lost his luster when famine hit the empire could no longer throw money from the balconies.  In his first year Caligula wasted the entire treasury that Tiberius had saved up during his reign.  This forced Caligula to wage war on the wealthy Romans.  He seized their property, rewrote their wills in order to make him the beneficiary, he raised taxes, forced others to give him loans, and openly rob travelers.  Still, he couldn’t escape the financial crisis.  It took a short reign (Claudius was assassinated) and many good works by the Senate and Claudius to restore Rome to some extent.

Our current circumstances aren’t much different than that of Rome’s during the time of Caligula.  We have a President (among other politicians on both sides) who live lavish lifestyles on the public dime, but stay in power by persuading the poor that they are their advocates.  This is why they have supported the “Occupy Movement”, the stimulus packages, the health care bill, increases in minimum wage, increases in public assistance, and expansions of public services.  This is why they have attacked the wealthy, blamed them for the nation’s struggles, and seized more and more of your/their wealth.  They are desperate for their power and know how to keep it, but their end is demise.  If you are fool enough to follow the nonsensical, and dense enough to support the senseless, then you will follow their corruption to its ultimate failure.

History is trying to teach us a lesson.  You can either open your ears and adjust, or ignorantly praise your leader with an empty stomach while you feed Incitatus his golden oats.

Original Post:  The Sentry Journal

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Occupods Propose Alternatives to Capitalism: Makes Absolutely no Sense in the Process

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We’ve seen all sorts of nonsensical comments from occupods.  Some propose communism while changing the terms. Others openly advocate for the murderous system.  And, still others make no sense whatsoever.  I think the following video exemplifies the third category…

And these people are the future leaders of this country?

I am officially afraid.

Then again, some protesters don’t even know what their signs mean…

Where’s the media on this? Of course, they’re too busy inventing the next Republican war on “X.”

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I'm a 1936 Republican

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The last three years have been very painful for many of conservatives.  We have witnessed first-hand the total disregard for our constitution, the overregulation of our economy, the devaluation of our dollar, and the out control spending which has created a massive debt for our children.  Now is not the time for watered down solutions.  Now is the time to think outside of the box.  Now is the time for bold action.  Now is the time for sound conservative policies to get America back on its feet.  And the platform Republicans should be standing on is the Republican platform of 1936.

It was 1936 and the nation was in peril.  The year marked FDR’s fourth year in office and by all accounts his manipulation and molding of a new society in the progressive image yielded very little in terms of putting people back to work.  People in America were still struggling after four years of progressive policies that failed to jump start the economy.  Our stock market was stagnating at best and even though GDP had slightly risen since the 1929 crash the economy was still under performing.  FDR’s central economic planning was failing as is Obama’s central economic planning is failing today.  The people of 1936 were facing many of the same economic woes we’re facing today.  I decided to take a look at the 1936 Republican platform to see where they stood.  I was surprised by what I discovered.  Below is the entire 1936 Republican platform.

1936 Republican Party Platform

America is in peril. The welfare of American

Men and women and the future of our youth are at stake. We dedicate ourselves to the preservation of their political liberty, their individual opportunity and their character as free citizens, which today for the first time are threatened by Government itself.

For three long years the New Deal Administration has dishonored American traditions and flagrantly betrayed the pledges upon which the Democratic Party sought and received public support.

The powers of Congress have been usurped by the President.

The integrity and authority of the Supreme Court have been flouted.

The rights and liberties of American citizens have been violated.

Regulated monopoly has displaced free enterprise.

The New Deal Administration constantly seeks to usurp the rights reserved to the States and to the people.

It has insisted on the passage of laws contrary to the Constitution.

It has intimidated witnesses and interfered with the right of petition.

It has dishonored our country by repudiating its most sacred obligations.

It has been guilty of frightful waste and extravagance, using public funds for partisan political purposes.

It has promoted investigations to harass and intimidate American citizens, at the same time denying investigations into its own improper expenditures.

It has created a vast multitude of new offices, filled them with its favorites, set up a centralized bureaucracy, and sent out swarms of inspectors to harass our people.

It has bred fear and hesitation in commerce and industry, thus discouraging new enterprises, preventing employment and prolonging the depression.

It secretly has made tariff agreements with our foreign competitors, flooding our markets with foreign commodities.

It has coerced and intimidated voters by withholding relief to those opposing its tyrannical policies.

It has destroyed the morale of our people and made them dependent upon government.

Appeals to passion and class prejudice have replaced reason and tolerance.

To a free people, these actions are insufferable. This campaign cannot be waged on the traditional differences between the Republican and Democratic parties. The responsibility of this election transcends all previous political divisions. We invite all Americans, irrespective of party, to join us in defense of American institutions.

Constitutional Government and Free Enterprise

We pledge ourselves:

1. To maintain the American system of Constitutional and local self government, and to resist all attempts to impair the authority of the Supreme Court of the United States, the final protector of the rights of our citizens against the arbitrary encroachments of the legislative and executive branches of government. There can be no individual liberty without an independent judiciary.

2. To preserve the American system of free enterprise, private competition, and equality of opportunity, and to seek its constant betterment in the interests of all.

Reemployment

The only permanent solution of the unemployment problem is the absorption of the unemployed by industry and agriculture. To that end, we advocate:

Removal of restrictions on production. Abandonment of all New Deal policies that raise production costs, increase the cost of living, and thereby restrict buying, reduce volume and prevent reemployment.

Encouragement instead of hindrance to legitimate business.

Withdrawal of government from competition with private payrolls.

Elimination of unnecessary and hampering regulations.

Adoption of such other policies as will furnish a chance for individual enterprise, industrial expansion, and the restoration of jobs.

Relief

The necessities of life must be provided for the needy, and hope must be restored pending recovery. The administration of relief is a major failing of the New Deal. It has been faithless to those who must deserve our sympathy. To end confusion, partisanship, waste and incompetence, we pledge:

1. The return of responsibility for relief administration to non-political local agencies familiar with community problems.

2. Federal grants-in-aid to the States and territories while the need exists, upon compliance with these conditions: (a) a fair proportion of the total relief burden to be provided from the revenues of States and local governments; (b) all engaged in relief administration to be selected on the basis of merit and fitness; (c) adequate provision to be made for the encouragement of those persons who are trying to become self-supporting.

3. Undertaking of Federal public works only on their merits and separate from the administration of relief.

4. A prompt determination of the facts concerning relief and unemployment.

Security

Real security will be possible only when our productive capacity is sufficient to furnish a decent standard of living for all American families and to provide a surplus for future needs and contingencies. For the attainment of that ultimate objective, we look to the energy, self-reliance and character of our people, and to our system of free enterprise.

Society has an obligation to promote the security of the people, by affording some measure of protection against involuntary unemployment and dependency in old age. The New Dealpolicies, while purporting to provide social security, have, in fact, endangered it.

We propose a system of old age security, based upon the following principles:

1. We approve a pay-as-you-go policy, which requires of each generation the support of the aged and the determination of what is just and adequate.

2. Every American citizen over sixty-five should receive the supplementary payment necessary to provide a minimum income sufficient to protect him or her from want.

3. Each state and territory, upon complying with simple and general minimum standards, should receive from the federal government a graduated contribution in proportion to its own, up to a fixed maximum.

4. To make this program consistent with sound fiscal policy the Federal revenues for this purpose must be provided from the proceeds of a direct tax widely distributed. All will be benefited and all should contribute.

We propose to encourage adoption by the states and territories of honest and practical measures for meeting the problems of unemployment insurance.

The unemployment insurance and old age annuity sections of the present Social Security Act are unworkable and deny benefits to about two-thirds of our adult population, including professional men and women and all those engaged in agriculture and domestic service, and the self employed while imposing heavy tax burdens upon all. The so-called reserve fund estimated at forty-seven billion dollars for old age insurance is no reserve at all, because the fund will contain nothing but the Government’s promise to pay, while the taxes collected in the guise of premiums will be wasted by the Government in reckless and extravagant political schemes.

Labor

The welfare of labor rests upon increased production and the prevention of exploitation. We pledge ourselves to:

Protect the right of labor to organize and to bargain collectively through representatives of its own choosing without interference from any source.

Prevent governmental job holders from exercising autocratic powers over labor.

Support the adoption of state laws and interstate compacts to abolish sweatshops and child labor, and to protect women and children with respect to maximum hours, minimum wages and working conditions. We believe that this can be done within the Constitution as it now stands.

Agriculture

The farm problem is an economic and social, not a partisan problem, and we propose to treat it accordingly. Following the wreck of the restrictive and coercive A.A.A.., the New Deal Administration has taken to itself the principles of the Republican Policy of soil conservation and land retirement. This action opens the way for a non-political and permanent solution. Such a solution cannot be had under a New Deal Administration which misuses the program to serve partisan ends, to promote scarcity and to limit by coercive methods the farmer’s control over his own farm.

Our paramount object is to protect and foster the family type of farm, traditional in American life, and to promote policies which will bring about an adjustment of agriculture to meet the needs of domestic and foreign markets. As an emergency measure, during the agricultural depression, federal benefits payments or grants-in-aid when administered within the means of the Federal government are consistent with a balanced budget.

We propose:

1. To facilitate economical production and increased consumption on a basis of abundance instead of scarcity.

2. A national land-use program, including the acquisition of abandoned and non-productive farm lands by voluntary sale or lease, subject to approval of the legislative and executive branches of the States concerned, and the devotion of such land to appropriate public use, such as watershed protection and flood prevention, reforestation, recreation, and conservation of wild life.

3. That an agricultural policy be pursued for the protection and restoration of the land resources, designed to bring about such a balance between soil-building and soil-depleting crops as will permanently insure productivity, with reasonable benefits to cooperating farmer’s on family-type farms, but so regulated as to eliminate the New Deal’s destructive policy towards the dairy and live-stock industries.

4. To extend experimental aid to farmers developing new crops suited to our soil and climate.

5. To promote the industrial use of farm products by applied science.

6. To protect the American farmer against the importation of all live stock, dairy, and agricultural products, substitutes thereof, and derivatives therefrom, which will depress American farm prices.

7. To provide effective quarantine against imported live-stock, dairy and other farm products from countries which do not impose health and sanitary regulations fully equal to those required of our own producers.

8. To provide for ample farm credit at rates as low as those enjoyed by other industries, including commodity and live-stock loans, and preference in land loans to the farmer acquiring or refinancing a farm as a home.

9. To provide for decentralized, non-partisan control of the Farm Credit Administration and the election by National Farm Loan Associations of at least one-half of each Board of Directors of the Federal Land Banks, and thereby remove these institutions from politics.

10. To provide in the case of agricultural products of which there are exportable surpluses, the payment of reasonable benefits upon the domestically consumed portion of such crops in order to make the tariff effective. These payments are to be limited to the production level of the family type farm.

11. To encourage and further develop co-operative marketing.

12. To furnish Government assistance in disposing of surpluses in foreign trade by bargaining for foreign markets selectively by countries both as to exports and imports. We strenuously oppose so called reciprocal treaties which trade off the American farmer.

13. To give every reasonable assistance to producers in areas suffering from temporary disaster, so that they may regain and maintain a self-supporting status.

Tariff

Nearly sixty percent of all imports into the United States are now free of duty. The other forty percent of imports compete directly with the product of our industry. We would keep on the free list all products not grown or produced in the United States in commercial quantities. As to all commodities that commercially compete with our farms, our forests, our mines, our fisheries, our oil wells, our labor and our industries, sufficient protection should be maintained at all times to defend the American farmer and the American wage earner from the destructive competition emanating from the subsidies of foreign governments and the imports from low-wage and depreciated-currency countries.

We will repeal the present Reciprocal Trade Agreement Law. It is futile and dangerous. Its effect on agriculture and industry has been destructive. Its continuation would work to the detriment of the wage earner and the farmer.

We will restore the principle of the flexible tariff in order to meet changing economic conditions here and abroad and broaden by careful definition the powers of the Tariff Commission in order to extend this policy along non-partisan lines.

We will adjust tariffs with a view to promoting international trade, the stabilization of currencies, and the attainment of a proper balance between agriculture and industry.

We condemn the secret negotiations of reciprocal trade treaties without public hearing or legislative approval.

Monopolies

A private monopoly is indefensible and intolerable. It menaces and, if continued, will utterly destroy constitutional government and the liberty of the citizen.

We favor the vigorous enforcement of the criminal laws, as well as the civil laws, against monopolies and trusts and their officials, and we demand the enactment of such additional legislation as is necessary to make it impressible for private monopoly to exist in the United States.

We will employ the full powers of the government to the end that monopoly shall be eliminated and that free enterprise shall be fully restored and maintained.

Regulation of Business

We recognize the existence of a field within which governmental regulation is desirable and salutary. The authority to regulate should be vested in an independent tribunal acting under clear and specific laws establishing definite standards. Their determinations on law and facts should be subject to review by the Courts. We favor Federal regulation, within the Constitution, of the marketing of securities to protect investors. We favor also Federal regulation of the interstate activities of public utilities.

Civil Service

Under the New Deal, official authority has been given to inexperienced and incompetent persons. The Civil Service has been sacrificed to create a national political machine. As a result the Federal Government has never presented such a picture of confusion and inefficiency.

We pledge ourselves to the merit system, virtually destroyed by New Deal spoilsmen. It should be restored, improved and extended.

We will provide such conditions as offer an attractive permanent career in government service to young men and women of ability, irrespective of party affiliations.

Government Finance

The New Deal Administration has been characterized by shameful waste, and general financial irresponsibility. It has piled deficit upon deficit. It threatens national bankruptcy and the destruction through inflation of insurance policies and savings bank deposits. We pledge ourselves to:

Stop the folly of uncontrolled spending. Balance the budget—not by increasing taxes but by cutting expenditures, drastically and immediately.

Revise the federal tax system and coordinate it with state and local tax systems.

Use the taxing power for raising revenue and not for punitive or political purposes.

Money and Banking

We advocate a sound currency to be preserved at all hazards.

The first requisite to a sound and stable currency is a balanced budget.

We oppose further devaluation of the dollar. We will restore to the Congress the authority lodged with it by the Constitution to coin money and regulate the value thereof by repealing all the laws delegating this authority to the Executive.

We will cooperate with other countries toward stabilization of currencies as soon as we can do so with due regard for our National interests and as soon as other nations have sufficient stability to justify such action.

Foreign Affairs

We pledge ourselves to promote and maintain peace by all honorable means not leading to foreign alliances or political commitments.

Obedient to the traditional foreign policy of America and to the repeatedly expressed will of the American people, we pledge that America shall not become a member of the League of Nations nor of the World Court nor shall America take on any entangling alliances in foreign affairs.

We shall promote, as the best means of securing and maintaining peace by the pacific settlement of disputes, the great cause of international arbitration through the establishment of free, independent tribunals, which shall determine such disputes in accordance with law, equity and justice.

National Defense

We favor an army and navy, including air forces, adequate for our National Defense.

We will cooperate with other nations in the limitation of armaments and control of tragic in arms.

Bill of Rights

We pledge ourselves to preserve, protect and defend, against all intimidation and threat, freedom of religion, speech, press and radio; and the right of assembly and petition and immunity from unreasonable searches and seizures.

We offer the abiding security of a government of laws as against the autocratic perils of a government of men.

Furthermore

1. We favor the construction by the Federal Government of head-water storage basins to prevent floods, subject to the approval of the legislative and executive branches of the government of the States whose lands are concerned.

2. We favor equal opportunity for our colored citizens. We pledge our protection of their economic status and personal safety. We will do our best to further their employment in the gainfully occupied life of America, particularly in private industry, agriculture, emergency agencies and the Civil Service.

We condemn the present New Deal policies which would regiment and ultimately eliminate the colored citizen from the country’s productive life, and make him solely a ward of the federal government.

3. To our Indian population we pledge every effort on the part of the national government to ameliorate living conditions for them.

4. We pledge continuation of the Republican policy of adequate compensation and care for veterans disabled in the service of our country and for their widows, orphans and dependents.

5. We shall use every effort to collect the war debt due us from foreign countries, amounting to $12,000,000—one-third of our national debt. No effort has been made by the present administration even to reopen negotiations.

6. We are opposed to legislation which discriminates against women in Federal and State employment.

Conclusion

We assume the obligations and duties imposed upon Government by modern conditions. We affirm our unalterable conviction that, in the future as in the past, the fate of the nation will depend, not so much on the wisdom and power of government, as on the character and virtue, self-reliance, industry and thrift of the people and on their willingness to meet the responsibilities essential to the preservation of a free society.

Finally, as our party affirmed in its first Platform in 1856: “Believing that the spirit of our institutions as well as the Constitution of our country guarantees liberty of conscience and equality of rights among our citizens we oppose all legislation tending to impair them,” and “we invite the affiliation and cooperation of the men of all parties, however differing from us in other respects, in support of the principles herein declared.”

The acceptance of the nomination tendered by the Convention carries with it, as a matter of private honor and public faith, an undertaking by each candidate to be true to the principles and program herein set forth.

H/T The American Presidency Project

Such talk today would be viewed by the left as radical, racist, and extreme. As for me, today’s Republican Party needs to take a page from the Republican Party of 1936. I choose the platform of the 1936 Republican Party because the solutions are sound and most of all they are derived from true conservatism.

Liberty forever, freedom for all!

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Obama Thinks "Unneeded" Income Belongs to Government?

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Commentary Magazine has a great article by John Steele Gordon.  I think it is quite revealing.

President Obama’s press conference yesterday—in which he only took questions from left-leaning reporters apparently–contained an amazing statement. It should be noted the first two instances of the first person singular pronoun in the sentence refer to Barack Obama, President of the United States. The second two refer to Barack Obama, taxpaying citizen:

And I do not want, and I will not accept, a deal in which I am asked to do nothing, in fact, I’m able to keep hundreds of thousands of dollars in additional income that I don’t need, while a parent out there who is struggling to figure out how to send their kid to college suddenly finds that they’ve got a couple thousand dollars less in grants or student loans. (emphasis mine)

But, unlike Scrooge McDuck, the rich do not put the excess in a vast money bin and frolic about in it. They invest it. What a concept! Where does Obama think new capital comes from, the tooth fairy? It’s nothing more than the excess of income over outgo. Take away the income the rich “don’t need” and spend it on social programs, and capital formation in this country drops to zero.

Gordon nails it completely.  In the absence of experience, or for that matter, reality, Obama takes to the leftist mantra that wealth is unfair, and that government is the arbiter of who gets what, or who keeps what.

Government, under the liberal vision, confiscates wealth, and spends it as they see fit.  And, we see the results every day; an expanding dependent class,  increased poverty, and decreased economic activity.  The economic pump is not “primed,” as FDR put it, it is instead buried, and sealed in concrete.   The left fails to realize that without the enticement of profit, businesses do not spend.  If businesses do not spend, they cannot be taxed.  When they cannot be taxed, government revenues goes down.  And then, the left’s precious social programs, which exacerbate the very problems that they are meant to ameliorate, are underfunded.

The fact that history teaches this again and again, without exception, is  irrelevant to the left.  Steele goes back in time to show that reality bounces right off of Obama…

So determined is Obama to deprive “the rich” of excess income–as defined by him, of course–he is even willing to adversely impact government income in order to do so. Read this colloquy between Obama and ABC’s Charlie Gibson in a 2008 debate with Hillary Clinton:

MR. GIBSON: And in each instance, when the [capital gains tax] rate dropped, revenues from the tax increased. The government took in more money. And in the 1980s, when the tax was increased to 28 percent, the revenues went down. So why raise it at all, especially given the fact that 100 million people in this country own stock and would be affected?

SENATOR OBAMA:  Well, Charlie, what I’?ve said is that I would look at raising the capital gains tax for purposes of fairness.

MR. GIBSON:  But history shows that when you drop the capital gains tax, the revenues go up.

SENATOR OBAMA: Well, that might happen or it might not. It depends on what’?s happening on Wall Street and how business is going.

Actually, it doesn’t. Every time capital gains tax rates have gone up, revenues have gone down and vice versa. High capital gains tax rates, because the tax liability is only incurred when an asset is sold, have the effect of locking in capital, which is economically pernicious, preventing capital from flowing to its most productive, i.e wealth creating, use.

Again, he knocks it right out of the park.  The ignorance of economic reality, and the effort to destroy the rich, no matter the fact that they will destroy the economy in the process, means nothing to Obama and his ilk.  His statement about “fairness” is frankly asinine, as it not only unfair to steal what others have legally earned, it will eventually hurt everyone.  The government will be underfunded, jobs will be lost, and everyone will be poorer.  But then again, socialism doesn’t build people up equally, it screws everyone down equally.

We call socialism “trickle up poverty” for a reason.  Because it is.

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Lessons from Economic Recessions II- The Forgotten Recession of 1920

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Last week I wrote in my post Lessons from Economic Recessions- Introduction and Great Depression:

History teaches lessons- it allows those of us in the present to see how results in the past worked. Economic recessions are a great teaching tool for policy makers and average citizens, because they teach us how the recession may have happened and how to emerge from the recession and therefore inform us as to the policy actions that we must take and those that we as citizens must support.

In that post, I talked about the lessons from the Great Depression. The lessons that I drew from the Great Depression are based though not on just data from that event, but from other recessions that our nation has entered and exited. Most liberals simply say ‘government spending got us out of the Great Depression’, but when I ask them about all of the other recessions that the United States entered, they have a blank look, as they do not have any knowledge of other recessions or how we emerged from them as a nation.

One of my friends in the media should try this sometime- ask a liberal policy maker- President Barack Obama, or Nancy Pelosi, or Carl Levin, or Debbie Stabenow, or Gary Peters- ask them what lessons they have personally learned from the Great Depression. I am sure they will roll off some long-winded answer that sounds educated and learned but basically boils down to ‘spend more money.’ Follow-up that question with a question on what lessons they learned from the Depression of 1920-21, or The Panic of 1907, or the Long Depression of 1873–79, and you’ll be sure to get blank looks from these policy makers, as they don’t have any knowledge about those recessions and have learned no lessons from them. They might even snap back some response to you about how unimportant it is to learn about other recessions- but they are wrong, because if you only draw your lessons on economic policy from one recession, the Great Depression, and your lessons are wrong at that, than you are sure to be wrong about very big and important policy decisions that have real effects on our nation.

Of course, my blog should not be the source for your education- I would advise you to spend some real time studying some real economists- but at least the knowledge that I display here and the lessons that I draw here are likely more educated than those of the above policy-makers, including our Harvard-trained President of the United States. So let’s discuss today the The Forgotten Depression of 1920.

The Depression of 1920–21, which was an extremely sharp deflationary recession in the United States that lasted from January 1920 to July 1921, which at 18 months in duration is longer than any of the recessions after WWII, and which saw a GDP decrease of anywhere from 3% to 7%. The recession of 1920–21 was characterized by extreme deflation- anywhere from 13% to 18% — the largest one-year percentage decline in around 140 years of data. Unemployment jumped anywhere from 4 to 6% in one year, the AT&T Index of Industrial Productivity showed a decline of 29.4%, and stocks fell dramatically during the recession. It was a very bad recession that led many in society to question the stability and future of the American system of capitalism.

At the time, Secretary of Commerce Herbert Hoover — later President Hoover- urged President Harding to consider an array of interventions to turn the economy around. Hoover, as we all know now, was a progressive Republican who believed that active government response by government officials who were smarter than the rest of us could shorten a recession and led to economic growth. Hoover advocated the same policy responses in 1920 that he implemented in 1929- increased spending by the government, increased taxes especially on the evil rich, increased regulation of businesses, bailouts for banks and ‘too big to fail’ companies, continued support to labor unions, and more government agencies and boards to organize and improve our existing economic system.

As you can see, the responses that Hoover advocated in 1920 and implemented in 1929 are very nearly the same policies that President Obama implemented in 2009. The results of these policies are seen today and were seen in 1929- but not in 1920 because President Warren Harding ignored Hoover and did the exact opposite as what he recommended. Whereas Hoover pushed for more government spending, Harding decreased it; when Hoover wanted more regulation, Harding put in place less; for every board of smart elites that Hoover proposed to control human action, Harding cut boards and agencies so that the common man could be more free; and Harding ignored demands to raise taxes and instead slashed taxes.

The result of Harding’s more conservative approach to the severe recession of 1920-1921? The recession ended quickly and ushered in an amazing period of robust economic activity the continued throughout the 1920’s as Harding and Coolidge continued conservative policies. It is no surprise that the limited government, balanced budget, low taxes, low regulation, and unleashing of human freedom led to the Roaring Twenties, an amazing period in American history of social, artistic, and economic dynamism, while the active government, increased taxes, massive government spending, and more regulation of the progressive Hoover and liberal Roosevelt led to the Great Depression.

Thomas E. Woods (author of The Politically Incorrect Guide to American HistoryMeltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse, and Rollback: Repealing Big Government Before the Coming Fiscal Collapse) recently wrote a great post on this subject called The Forgotten Recession- I advise you to read the whole article, but here are several important pieces of it:

…It is hardly necessary to point out that Harding’s counsel — delivered in the context of a speech to a political convention, no less — is the opposite of what the alleged experts urge upon us today. Inflation, increased government spending, and assaults on private savings combined with calls for consumer profligacy: such is the program for “recovery” in the 21st century.

Not surprisingly, many modern economists who have studied the depression of 1920–1921 have been unable to explain how the recovery could have been so swift and sweeping even though the federal government and the Federal Reserve refrained from employing any of the macroeconomic tools — public works spending, government deficits, and inflationary monetary policy — that conventional wisdom now recommends as the solution to economic slowdowns. The Keynesian economist Robert A. Gordon admitted that “government policy to moderate the depression and speed recovery was minimal. The Federal Reserve authorities were largely passive.… Despite the absence of a stimulative government policy, however, recovery was not long delayed.”…

…There was nothing at all unusual about the pattern of American wealth in the 1920s. Far greater disparities have existed in countless times and places without any resulting disruption.

In fact, the Great Depression actually came in the midst of a dramatic upward trend in the share of national income devoted to wages and salaries in the United States — and a downward trend in the share going to interest, dividends, and entrepreneurial income. We do not in fact need the violent expropriation of any American in order to achieve prosperity, thank goodness…

…Harding’s inchoate understanding of what was happening to the economy and why grandiose interventionist plans would only delay recovery is an extreme rarity among 20th-century American presidents. That he has been the subject of ceaseless ridicule at the hands of historians, to the point that anyone speaking a word in his favor would be dismissed out of hand, speaks volumes about our historians’ capabilities outside of their own discipline.

The experience of 1920–1921 reinforces the contention of genuine free-market economists that government intervention is a hindrance to economic recovery. It is not in spite of the absence of fiscal and monetary stimulus that the economy recovered from the 1920–1921 depression. It is because those things were avoided that recovery came. The next time we are solemnly warned to recall the lessons of history lest our economy deteriorate still further, we ought to refer to this episode — and observe how hastily our interrogators try to change the subject….

Read the whole article- the logic, the understanding, the theories, and the explanation are all in there, and go into economic terms and theories that I am only beginning to gain an understanding of.

The lessons that I drew regarding the Great Depression are supported by the lessons that one can learn from the Recession of 1920-1921- that economic recessions are worsened and lengthened by a government that takes away human liberty, treats people as numbers to manage, takes wealth and property from those who have earned it, and that in every other way violates the Founding Principles of our nation (limited government, federalism, and separation of power). It is up to policy makers to learn those lessons and to vote accordingly on future legislation facing our nation.

Keep reading my blog regularly for future posts on this subject, and I continue becoming educated and drawing lessons from other past economic recessions that our nation faced and overcome.

Original Post:  A Conservative Teacher

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