Citizen Tom

Here is the email I sent Senator Jim Webb today.

Subject:  Senator Reid’s 2074-Page Monstrosity

Dear Senator Webb

I write to ask you once again to vote against proposals that would lead to a government takeover of health care.  In particular, I want you to vote against Senator Reid’s Health Care Bill.  The bill is a 2074-page monstrosity.  We do not need such nonsense.

I would also like to thank you for responding to my previous email.  I appreciate the time you and your staff took to respond.  I also enjoyed reviewing your new website (http://www.webb.senate.gov/).

I listened to your video.  I just had one disappointment with the video.  You want to use the full faith and credit of the US Government to back loans for nuclear power plants.  Please strike such nonsense from your bill.

Is it government’s place to solve all our problems?  Don’t our leaders have enough to do protecting our rights?  Doesn’t increasing the government’s mission, size, and complexity beyond any commonsense always create unanticipated problems?

What do either Senator Reid or your congressional colleagues know about energy production or heath care?  What qualifies you and your colleagues to build a power plant or to choose either my insurance plan or the insurance plan of any other citizen?  When existing government health care programs are going broke, is that not a good clue of congressional overreaching?

When Congress gets into the business of running the economy, its members do not have a prayer of maintaining any objectivity.  Then, instead of regulating our economy so that people do not step on each others rights, Congress just becomes the biggest part of the problem.

You and your congressional colleagues are breaking us.  We cannot afford Congress spending any more of our money on costly white, unconstitutional elephants.

Please check out US National Debt Clock.  Congress cannot keep using the People’s money to buy our votes.  Let me reiterate.  We are going broke.  Please stop spending more money than we have.  Please stop assuming more unfunded liabilities.

We live in frightening times.   I grew up during the Cold War.  We then had good reason to fear the possibility of nuclear warfare.  Nonetheless, few thought we would self-destruct.  Yet that seems to be what I think we are seeing, and I am not the only one.

I got the following from a relative.  He is a business major, and he is not wont to distrust our country or its institutions.  Nonetheless, he asked me what I thought about it.

If u r recieving this email it is cause u r important to me. I wanted to share with u something that caught my attention. As a student of finance, I have recently learned of the possibility of the US heading into hyperinflation. In economics, hyperinflation is inflation that is very high or “out of control”, a condition in which prices increase rapidly as a currency loses its value. This is what happended in post World War I Germany. $ had such little value, people used it as wallpaper. It took carts of $ just to buy a loaf of bread in Weimar Germany.

A woman using $ as fuel.

Hyperinflation is also currently taking place in Zimbabwe…

A vendor sells sweets and snacks with an average price of 15 million Zimbabwean dollars each, on the streets of Highfileds in Harare, Tuesday, May, 20, 2008. As Zimbabwe’s inflation soared to more than a million percent according to independent analysts the country faces a bleak future ahead of a run off election set for June 27. (AP Photo/Tsvangirayi Mukwazhi) Read more at:

http://www.huffingtonpost.com/2008/05/21/zimbabwe-inflation-now-ov_n_102899.html

The effect of increasing the monetary supply leads to inflation. Our Fed has produced trillions of dollars, that are currently being stored up in our banks. Remember the bank bailouts? When the banks start lending money again, our markets will become flooded with an excess of currency. The value of our currency drops when this happens. Which causes inflation.The prices of our goods n services will increase, which will cause the govt to print more money so it’s consumers can afford to buy the products being produced, which will cause another increase in the price of consumer gds n service and so on and so on. Argentina is a recent example of this increase in the money supply as well. Here is an excerpt from an article taken from

http://academic.reed.edu/economics/course_pages/201_f06/Cases/money_and_inflation_in_arg.htm

For most of the last fifty years, Argentina has vied with other South American countries and a few countries in other parts of the world for the dubious honor of having the highest inflation rate in the world. As is always the case with rapid inflation, the price increase in Argentina was fueled by rapid expansion of the money supply. The seigniorage earned from monetary expansion served the needs of the government as a method of taxation that was difficult to avoid and politically easy to enact.

…sound familiar?

While I try to be objective when hearing sensationalistic news, I think this is worthy information to take into consideration. My philosophy is prepare for the worst, hope for the best. Plus as Christians, I think it is a great witness to be informed, prepared and able to help in such unwelcome times.

Here is a link to a 3 part video on hyperinflation in our nation. It showcases some prominent economists and investors. One man, Peter Schiff, actually forecasted our current recession. He was publically ridiculed by his peers, including Ben Stein, on national television. He is now trying to raise awareness of the “real” state of our economy, the reality we don’t hear from most of our governing officials and economic pundits. This is all speculation, but if it is true, it is too important to ignore.

youtube=http://www.youtube.com/watch?v=SzmYI_4XCbM

Here are some good ideas on how to get prepared in the case of hyperinflation

http://www.ehow.com/how_4545539_survive-hyperinflation.html

We may see hyperinflation.  I don’t honestly know, but I know the problem is serious (see the US National Debt Clock).  I am certain we will see significant inflation.  However, if a bunch of people lose their jobs, that inflation may be preceded by a period of deflation.  Even if the currency drops in value (inflation), if there no buyers, prices will drop (net deflation).  High employment, unfortunately, will not improve the situation.

What I find somewhat confusing is why we are doing this?  Why is the current administration behaving so insanely?  Why did we elect these people?

I don’t know if our leaders are deliberately wrecking the economy or just insane ideologues.  I don’t know whether the Democrats are insanely power hungry or just stupid.  My guess is both, but why wreck the country just so you can be in charge of the ruins?  Do people hate their own country that much?  I fear they do.

When I consider our current crop of leaders, they make me think of something I read in high school.

Here we may reign secure, and in my choyce

To reign is worth ambition though in Hell:

Better to reign in Hell, then serve in Heav’n.

– So Satan spoke in Paradise Lost by John Milton.

What should we do?  What can we do?  Note how that one article said the citizens of Argentina fixed their inflation problem.

In 1990, the government began to completely overhaul the organization of the Argentine economy. It included (a) comprehensive liberalization of foreign trade and capital movements, (b) the privatization of public enterprises and the deregulation of the economy, (c) reduction of the bureaucratic apparatus of the public sector and the reconstruction of the tax system, and (d) the creation of a new monetary system.

Government expenditure fell drastically from 35.6 percent of GDP in 1989 to 29.8 percent in 1990, and continued to fall to 27 percent of GDP by 1995. The fiscal deficit also decreased sharply from 7.6 percent of GDP in 1989 to 2.3 percent in 1990, and from 1991 onward, it fluctuated around 0 percent, accompanying the economic cycle.  (from here)

The citizens of Argentina reduced the government’s role in their economy.  We, on the other hand, have leaders who want to do the exact opposite.  Unfortunately, the citizens of Argentina did not stick to their guns either.  During the period of 2001-2002, Argentina found itself heavily in debt and unable to pay the bill (see here and here).

When challenger John Bell and Delegate Bob Marshall debated last week (see here), Bell twice cited economist John Maynard Keynes.   To prove that President Barack Obama’s profligate spending makes sound economic sense, Bell cited the expertise of Keynes.  Unfortunately, I doubt most people either understand or appreciate the sheer stupidity and idiocy of Keynesian Economics.

What is Keynesian Economics?  Investopedia puts it this way.

What Does Keynesian Economics Mean?
An economic theory stating that active government intervention in the marketplace and monetary policy is the best method of ensuring economic growth and stability.

Investopedia explains Keynesian Economics
A supporter of Keynesian economics believes it is the government’s job to smooth out the bumps in business cycles. Intervention would come in the form of government spending and tax breaks in order to stimulate the economy, and government spending cuts and tax hikes in good times, in order to curb inflation.

Because they support government intervention, Democrats almost invariably support Keynesian Economics.  Conservatives do not. Conservatives understand that in practice Keynesian Economics just gives Liberals one more excuse to increase government spending.

Who was John Maynard Keynes? In a flattering profile written by Robert B. Reich, Time Magazine had this to say.

Yet Keynes’ largest influence came from a convoluted, badly organized and in places nearly incomprehensible tome published in 1936, during the depths of the Great Depression. It was called “The General Theory of Employment, Interest and Money.”

Keynes’ basic idea was simple. In order to keep people fully employed, governments have to run deficits when the economy is slowing. That’s because the private sector won’t invest enough. As their markets become saturated, businesses reduce their investments, setting in motion a dangerous cycle: less investment, fewer jobs, less consumption and even less reason for business to invest. The economy may reach perfect balance, but at a cost of high unemployment and social misery. Better for governments to avoid the pain in the first place by taking up the slack.  (from here)

Keynes is the man who provided Liberal spenders an academically credible excuse for deficit spending.  Ironically, Reich goes so far in defending Keynesian Economics that he credits World War II, not Franklin D. Roosevelt and the Democratic Party, with ending the Great Depression.

As the Depression wore on, Roosevelt tried public works, farm subsidies and other devices to restart the economy, but he never completely gave up trying to balance the budget. In 1938 the Depression deepened. Reluctantly, F.D.R. embraced the only new idea he hadn’t yet tried, that of the bewildering British “mathematician.” As the President explained in a fireside chat, “We suffer primarily from a failure of consumer demand because of a lack of buying power.” It was therefore up to the government to “create an economic upturn” by making “additions to the purchasing power of the nation.”

Yet not until the U.S. entered World War II did F.D.R. try Keynes’ idea on a scale necessary to pull the nation out of the doldrums — and Roosevelt, of course, had little choice. The big surprise was just how productive America could be when given the chance. Between 1939 and 1944 (the peak of wartime production), the nation’s output almost doubled, and unemployment plummeted — from more than 17% to just over 1%.  (from here)

Please note Reich’s curious notion of “productivity.”  By 1944 the United States had become a gigantic war machine, productivity then being ultimately defined by the ability to destroy and eradicate entire nations.

Prosperity did not actually return until the end of the war.  When World War II ended, America finally emerged from the poverty of the Great Depression and the self denial required to win World War II.  With the war’s end, government spending and economic control radically decreased.

After years of poverty and then war, Americans had had enough of government.  To the surprise of many, the economy slipped quite easily from war to peace with very little government intervention.

So what did Keynes contribute?  Keynes poorly written economic tome provided yet one more excuse for government to spend more money than we pay in taxes.   When Democrats want to spend money we don’t have, they simply proclaim the virtues and necessity of Keynesian Economics.

In an earlier post, THE STUPIDITY CYCLE, I bemoaned the expected passage of a stimulus bill.   What did that post say?  Despite Reich’s claims to the contrary, there is no real consensus among economists about government’s role in the economy.  Our politicians cannot explain how a stimulus bill helps the economy.  Their theory and their numbers don’t add up.

What that post did not explain is why Keynesian Economics cannot work.  What is the problem?  Government spending and private spending have distinctly different motivations.   Government spending is controlled by politicians.  Instead of economic values, political gains motivate government spending.  Instead of being central to government spending, profit and economic efficiency are incidental to government spending.

Consider what happens in the private economy.  When we spend our own money, we want something of value.   So almost every time money changes hands, more value is added of our economy.  In fact, to get our hands on a dollar in the private economy, each of us has to work and contribute something somebody else needs.  The farmer has to grow a crop.  The railroad engineer has to take grain to mill.  The trucker has to carry cereal to a grocery store.  The grocery store clerk has to stock shelves and sell consumer products.   And so forth.

On the other hand, when a conniving politician spends a dollar, the value he wants is influence.  To satisfy a politician, government spending has to buy the votes he needs.   That is why so much government spending involves entitlements and welfare.  This is money given away to buy votes.   As important as our votes may be, our votes add little value to our economy.  Thus, much of the money government spends is wasted just to buy votes.

Charity, of course, is noble.   In fact, it is because charity is too important and too costly we cannot entrust it to elected officials.  Such have a conflict of interest that is just too obvious.  Thus, when Bell proclaims the virtues of Keynesian Economics, we know he is unqualified for the job he seeks.

Are we seeing signs that the unraveling might be reversed?  It is too early to say.   Try googling the last 24 hours of news for congress and townhall.  The results will be a mixture of horror and hope.  President Barack Obama is out stage managing his meetings (here).  Other Democrats, however, have been less successful (here and here, for example).  So they are struggling, and some have switched to virtual formats that allow them far more rigid control (here).  Meanwhile, instead of reporting on the issues that have frightened and upset voters, much of the news media just highlights anger (here, here, and here).

As citizens, we have a management responsibility.  Even when our employees (our elected officials) and the news media have lost their cool, we have a responsibility to keep our own heads clear.  Otherwise, our families and our friends will suffer.

In many respects our government is like an huge corporation, and we are like stockholders.  Most of us have just a small share in this corporation, but for all of us, it is virtually everything we have.  If our government fails, we lose everything.

So even though each of us alone can do very little, it still behooves each of us to take an active role in the management of government.  However, before we do anything, we have to figure out what we should do.

Many of us have begun to notice our government is spending money carelessly and that our government officials want unwarranted powers.  Consider these outstanding items:

• Although they cost hundreds of billions, the stimulus bills never made any real sense.  The bills just rescued big Wall Street players with political connections.
• For no apparent reason (Where is the science?), the climate bill (cap and trade) would stifle an already struggling economy.
• Even though 80 percent of us are happy with the current system, the Democrats want a health care bill that would nationalize and socialize medicare.  When they must know socialism does not work, why would our elected leaders support such a crazy thing?
• When the public has already adamantly rejected the stupid idea, Congress still insists upon an amnesty bill for illegal immigrants.

Obviously, we have elected intractable idiots to our Board of Directors.  How did we ever do such a stupid thing?  The answer, unfortunately, is obvious.  As stockholders, we voted for those clowns.

Look around.  Look at our neighbors.  Some are smart.  Some are dumb.  A few are very nice.  A few are cruel and mean.  Most are like you and me; they are happy tending to their own affairs.  Yet many of us want something for nothing from government, and we have given little or no consideration to the consequences.

What happens as a corporation gets bigger?  Doesn’t the company get more difficult to manage?  What if we own stock in a big corporation?  Don’t we have a choice as that corporation gets bigger?  We can try to manage the company, or, if we see the stock going down, we can sell our stock.

As citizens, we are also “stockholders” in a big corporation.  When our government gets bigger, it too gets harder to manage.  However, unlike a commercial corporation, it is impractical to sell our shares in the government, and if the government collapses, we will lose everything.

As citizens, we must accept responsibility for our role in the mess we have created.  So that we can understand it well enough to manage it, we must demand much less from our government.  If we want our elected officials to be honest, then each of us must stop feeding at the government trough.

• If a function now performed by government can be just as easily performed by private entities, then we must demand our government give up that function.
• If it is the least bit practical for the users of government services to pay for the services they receive, then we must insist those users pay, not everybody else.

In fact, we should not be surprised that so many of our elected officials behave like cheats, frauds, and thieves.  That is what we have elected them to be.  We must recognize that nothing provided by government is “free.”  Whenever a politician promises us anything, to give this thing to us, he has to steal something from someone.  Redistributing the wealth is just another name for this stealing.  All redistributing the wealth does is make thievery from your neighbors legal.

The Cartoons

For some reason when I was searching for cartoons on Congress and Townhall Meetings, this image came up.  Yipes!

Here is the more traditional cartoon.

From here.

A light at the end of the tunnel? Perhaps.  At least that is what Lawrence Kudlow thinks.

A tremendous summer rally is going on in stocks, and it’s being driven by better corporate profits and improved leading indicators — including a possible upturn in housing starts and sales, and a major downward spike in weekly initial jobless claims. So you have to believe the stock market is calling the tune for recovery.

The question is why?  If we are seeing the beginnings of a turnaround, to what and to whom should we give credit?

While politics is not everything, I do believe that the shrinking prospects for Obamacare have been a big contributor to the stock market’s recent surge. This sweeping new government insurance plan would lead to high-tax-and-spend-and-borrow-and-regulate nationalized health care, a big economic negative. Ditto for nationalizing energy through cap-and-trade-and-tax. If these initiatives fail, it is very bullish for stocks and the economy.

Kudlow also defers to the opinions of others.  Thus he provides Senator Jim DeMint’s observation.

Mr. DeMint told me during our interview that the economy is getting better mainly because of the corrective forces of free-market capitalism in the private free-enterprise sector, and not from all this government spending and borrowing. Abstracting from the Fed’s big stimulus effort, he’s right.

By November 2010 (election time), our economy, in spite of everything Obama and the Democrats can do to mess it up, may actually recover a bit. Republicans need to start claiming credit now!  To the extent they can claim to have prevented the ravages of socialism, Republicans have scored a huge victory for the national economy  — and liberty.

Ideology makes a difference.  The beliefs we act upon make a difference.   Instead of talking down Democrats and the economy, Republicans need to talk up free market economics.  Instead of offering to bring home the bacon, Republicans need to explain what government does best — and then offer to dismantle wasteful, busybody programs that do nothing but empower corrupt politicians.

Stubborn and determined Democrats connive to force socialism upon us.  Their schemes began with President Franklin D. Roosevelt’s New Deal and regained strength with President Lyndon B. Johnson’s Great Society.  The Democrats offer Utopia — poppycock dreams and nonsense “rights.”

Nonetheless, we have precious few Republicans with the courage to earnestly fight back.  What is the alternative vision Republican vision?  Is it bipartisanship and reasonableness?  Is it moderated socialism?  Too often that has been the case.  So it is that spineless Republicans have lost elections.  When we can have our socialism straight up, why bother with the wimpy, watered down version?

Before our nation unravels, we now have one last opportunity to reverse the trend.  With clear majorities in Congress and a lock on the White House,  Democrats have become arrogant.   The Democrats have revealed the character of their plans.  With only a little effort, we can see that their schemes lead to nothing but tyranny.  And that is why they rush in haste to pass legislative bills that would cement their power.

With such deviousness there can be no compromise.  When our opponents do not even have the scruples required to honor their oath of office, we cannot negotiate.  Republican politicians must either stand for liberty, or we must discard them.