|Yes We Can Repeal||Giving Thanks for Obama|
by Christopher Chantrill
November 25, 2010 at 1:27 pm
THERE ARE two reasons for the Federal Reserves decisions to print lots of money. The good reason is that the real-estate crash still hasnt cleared. That is, too many mortgaged homeowners are still under water and the real-estate estate market is all locked up with a huge overhang of foreclosures. When too many debtors are under water and cant make their payments then the economy is going to stagnate.
People like to make this complicated, but it isnt. Capitalism works on credit. Credit means faith, faith that the other guy can meet his obligations in the market. When you are afraid that the other guy is going to welsh on you, then you stop trading in the market.
The bad reason for the Feds QE2 policy is that President Obama needs a good economy when he goes to the voters in 2012. When bad politicians need to goose the economy in time for the next election they traditionally opt for the quick fix of easy money.
Weve seen all this before, of course. President Nixon successfully used easy money to goose the economy prior to the 1972 election. In 1971 the president was concerned that the economy was not coming out of the 1969-70 recession fast enough. So he closed the gold window, imposed wage and price controls, and gunned the money supply. Here is what happened
As you can see, President Nixons policy got the economy through the election with gangbusters growth of over five percent real GDP in 1971 and 1972, but inflation soared once the president started to relax the wage and price controls, and by 1974 the US was back in recession again. Then we had another inflationary boom in the Carter years and another big recession in 1980-82. It took a Federal Reserve Board chairman with cojones and an amiable dunce of a B-movie actor in the White House to stop the rot.
The problem for President Obama is that the economy will probably not react to economic abuse as meekly as in 1971-72. The reason is that back then the US government had numerous instruments of financial repression that are not available today. Americans couldnt own gold back then. They couldnt easily switch out of dollars. There were Depression era financial regulations still in place that made it easy for the government and hard on the consumer and the investor. Plus, of course, back in 1971 the US dollar was the unquestioned global reserve currency.
Today the average investor can own gold, can own foreign currency and equities, and can switch in and out of them at the drop of a hat. That just means that when the end comes for Obamanomics, it will come quickly. The trouble for Obama and the Democrats is that the end might come before the election.
When the end comes Democrats are going to find out that it is Democrats who are going to have to pay the price for the follies of big government. Its about time. Big government is bad for the economy and bad for the welfare of individual Americans. But up to now, Democrats have avoided paying for the messes of big government, because whenever the economy has turned sour they have demanded equal sacrifice. Equal sacrifice is a weasel word; it means that the guys that caused the problem should not have to pay for it.
One of the reasons that equal sacrifice wont work this time is that Republicans all of a sudden have their own Saul Alinsky. When Gov. Chris Christie (R-NJ) publicizes school superintendent Lee Seitz by name for trying to re-up his contract before New Jerseys superintendent pay cap takes effect, you realize that he is following in the steps of the master. Remember?
RULE 12: Pick the target, freeze it, personalize it, and polarize it. Cut off the support network and isolate the target from sympathy. Go after people and not institutions; people hurt faster than institutions.
Greedy bankers, please give a hand to your new partners-in-crime: greedy educrats.
Looking forward to 2013, we will either see a new president cutting spending after two years of stagflation or we will see President Obama facing a nasty recession and a committee of wise men telling him that the only way out is to cut spending.
So the only question for 2013 will be how much we are going to cut public sector pensions, how long we are going to freeze public sector wages, and how deep we are going to cut the vast universe of wasteful government programs. You can go to usgovernmentspending.com to check on all that. The big programs are pensions, health care, and education. Each of them amounts to about $1 trillion a year. Thats where the money goes. Everything else is chump changeincluding interest payments, at least for now.
The real biggie, down the road, is cuts to Medicare. What will grandma say when they come to cut her Medicare?
Buy his Road to the Middle Class.
[W]hen I asked a liberal longtime editor I know with a mainstream [publishing] house for a candid, shorthand version of the assumptions she and her colleagues make about conservatives, she didn't hesitate. Racist, sexist, homophobic, anti-choice fascists, she offered, smiling but meaning it.
Harry Stein, I Can't Believe I'm Sitting Next to a Republican
Families helped each other putting up homes and barns. Together, they built churches, schools, and common civic buildings. They collaborated to build roads and bridges. They took pride in being free persons, independent, and self-reliant; but the texture of their lives was cooperative and fraternal.
Michael Novak, The Spirit of Democratic Capitalism
[To make] of each individual member of the army a soldier who, in character, capability, and knowledge, is self-reliant, self-confident, dedicated, and joyful in taking responsibility [verantwortungsfreudig] as a man and a soldier. — Gen. Hans von Seeckt
MacGregor Knox, Williamson Murray, ed., The dynamics of military revolution, 1300-2050
For [the left] there is only the state and the individual, nothing in between. No family to rely on, no friend to depend on, no community to call on. No neighbourhood to grow in, no faith to share in, no charities to work in. No-one but the Minister, nowhere but Whitehall, no such thing as society - just them, and their laws, and their rules, and their arrogance.
David Cameron, Conference Speech 2008
Imagining that all order is the result of design, socialists
conclude that order must be improvable by better design of some superior mind.
F.A. Hayek, The Fatal Conceit
[Every] sacrifice is an act of impurity that pays for a prior act of greater impurity... without its participants having to suffer the full consequences incurred by its predecessor. The punishment is commuted in a process that strangely combines and finesses the deep contradiction between justice and mercy.
Frederick Turner, Beauty: The Value of Values
[The Axial Age] highlights the conception of a responsible self... [that] promise[s] man for the first time that he can understand the fundamental structure of reality and through salvation participate actively in it.
Robert N Bellah, "Religious Evolution", American Sociological Review, Vol. 29, No. 3.
But the only religions that have survived are those which support property and the family.
Thus the outlook for communism, which is both anti-property and anti-family, (and also anti-religion), is not promising.
F.A. Hayek, The Fatal Conceit
[T]he way to achieve a system of determining admission to the public schools on a nonracial basis,
Brown II, 349 U. S., at 300–301, is to stop assigning students on a racial basis. The way to stop
discrimination on the basis of race is to stop discriminating on the basis of race.
Roberts, C.J., Parents Involved in Community Schools vs. Seattle School District
A writer who says that there are no truths, or that all truth is merely relative, is asking you not to believe him. So dont.
Roger Scruton, Modern Philosophy
Paul Dirac: When I was talking with Lemaître about [the expanding universe] and feeling stimulated
by the grandeur of the picture that he has given us, I told him that
I thought cosmology was the branch of science that lies closest to religion.
However [Georges] Lemaître [Catholic priest, physicist, and
inventor of the Big Bang Theory] did not agree with me. After thinking it over he
suggested psychology as lying closest to religion.
John Farrell, The Creation Myth
Within Pentecostalism the injurious hierarchies of the wider world are abrogated and replaced by a single hierarchy of faith, grace, and the empowerments of the spirit... where groups gather on rafts to take them through the turbulence of the great journey from extensive rural networks to the mega-city and the nuclear family...
David Martin, On Secularization