Category Archives: Debt

A-Jad Has A Question

Iranian President Mahmoud Ahmadinejad (or A-Jad) has a question for the presidential candidates, if Candy Crawly (or the next bobblehead) will allow it. Asks A-Jad:

“How long can a government with a $16 trillion foreign debt remain a world power?”… “The Americans have injected their paper wealth into the world economy and today the aftermaths and negative effects of their pseudo-wealth have plagued them.”
…“An empire, or a government, remains in power so long as the people under its power support it, but today the Americans have acted in a way that the world nations do not like them at all, and therefore, their international legitimacy is annihilated.”

More important than “international legitimacy,” for which Obama has not stopped striving: Both candidates have told the biggest foreign owner of U.S. Treasury bonds to go to hell. Where will the US be without America’s largest creditor, China?

‘Juicing The Stock Market’ With A Confetti Of Funny-Money

Debt, Federal Reserve Bank

Democrats often counter the Republicans’ inchoate criticism of Obamanomics with the claim that Barack Obama has juiced the stock market like no other president.

Well of course he has. The consequence of Ben Bernanke’s non-stop monetary stimulus is a rise in prices, stocks included. Homes too.

But an increase in the price of an item is not the same as an appreciation in its value.

Promiscuous printing (inflation) decreases the purchasing power of each monetary unit (the dollar). As Peter Schiff pointed out, after the latest bout of quantitative easing—and before other foreign bankers were nudged to print in unison—“the Greenback was down 2.2% against the euro, 1.6% against the Australian Dollar, and 1.1% against the Canadian Dollar. A week after the Fed’s move, the Mexican Peso had appreciated 2.7% against the US dollar.”

If you don’t already know it, QE2 saw the Fed purchase Treasury securities, which “resulted in a cumulative threefold increase in the monetary base.” In “Operation Twist,” Bernanke, one twisted brother, exchanged short-term for long-term Treasuries.

That move, warned Schiff, “exposed US taxpayers and holders of dollar-based assets to the dangers of shortening the maturity on $16 trillion of outstanding government debt. Such a repositioning exposes the Treasury to much faster and more painful consequences if interest rates rise. Still, the set of policies announced yesterday will do so much more damage than ‘Operation Twist,’ they should be dubbed ‘Operation Screw.’ Because make no mistake, anyone holding US dollars, Treasury bonds, or living on a fixed income will have their purchasing power stolen by these actions.”

QE3, or “Operation Screw,” “focused directly at the housing market through purchases of mortgage backed securities.” Its outline: “buy hundreds of billions of home mortgages annually in order to push down mortgage rates and push up home prices.”

The upshot of the Fed’s confetti of funny-money?

…rather than building an economy on increased productivity, production, and wealth accumulation, he is trying to build one on confidence, increased leverage, and rising asset prices. In other words, the Fed prefers the illusion of growth to the restructuring needed to allow for real growth.

MORE.

We Are ‘Livin’ La Vida Loca’ As The Beltway’s Bitches

Debt, Government, Politics, Taxation, The State, Welfare

Better late than never. The Beltway press discovers and reveals that wealth in the D.C. hood comes from, as I put it in 2010, the graft flowing into Rome from the ‘provinces.’ FoxNews.com quotes Tim Carney, columnist for the Washington Examiner, explaining why D.C. prospers as the rest of the country buckles under its weight.

“Sometimes I think that D.C. is the vortex and there’s a giant sucking sound of American wealth and jobs coming in here. It’s not free trade, it’s not commerce … it’s government. The taxpayers are the ones who are paying to build up this region.”

The American Community Survey released last Thursday found seven of the nations top 10 wealthiest counties now surround Washington, D.C. They include Loudoun County, Va., ranked No. 1, with a median household income over $119,000 dollars a year. Fairfax County, Va., was second with $105,000 and Arlington County, Va., third with just over $100,000 a year in median household income.

From “Our Overlords Who Art in D.C.,” December 17, 2010:

“All life in Washington today derives ultimately from the capitals’ own version of Rome’s annona — the continuous infusion not of grain and olive oil but of tax revenue and borrowed money. Instead of ships and barges there are banks, 10,000 of them designated for this purpose, which funnel the nations’ tax payments to the city. This ‘never-ending flow of revenue creates a broad level of affluence that has no real counterpart anywhere in America.” Says Murphy: “Washington simply doesn’t look like the rest of America.” But its residents “fail to view this as bizarre.”
America’s annona was facilitated by the Sixteenth Amendment. With its passage, in 1913, Murphy admits begrudgingly, “A Rubicon was crossed, giving Washington the unimpeded power to levy an income tax and therefore spend ever larger amounts of money.” As in Rome, D.C. grubbiness coexists with “rhetoric of high-mindedness about the duties and burdens of leadership.”
Thanks to the graft flowing into the Beltway, the average income in and around Washington D.C. is $85,189 compared to $49,777 for the hinterland, where unemployment rates are almost double. The rest of the country exists to serve its masters in modern Rome.

Alas, “Statism Starts With YOU!” The fatter the feds the happier Americans seem to be:

As for America’s fondness for Social Security, Medicare and Medicaid — which combined, account for close to half of the federal government’s budget — …only 7 percent of the country will consider slashing the first two welfare programs. And a mere eleven percent of those living in the “Land of the Free” are prepared to pare down Medicaid.
Keep the government out of my Medicare! For a while — and in all seriousness — Dick Morris even promoted a similar slogan on Fox News. It was this Republican hack’s ploy to alert seniors to the dangers to Medicare from Obamacare. The sink-hole of debt into which this country has slid, because of state spending, scares its citizens. But not sufficiently to seriously motivate them to dent “defense” spending. Just a fifth will entertain trimming the estimated $1 trillion which the United States blows on defending to the death borders not its own.

Unless the people of the “provinces”—you out there—are willing to do something drastic, like repeal the American annona, we will all have to learn to live forever after as the Beltway’s bitches.

Who Will Be Our ‘Massa’? The Mormon Or The Mulatto?

BAB's A List, Business, Debt, Democrats, Intellectual Property Rights, libertarianism, Regulation, Republicans, Ron Paul, Taxation, The State, War, Welfare

We all live on the “plantation”; we are all “moocher-hiddeen,” says Barely A Blog contributor, Myron Pauli.

Who Will Be Our ‘Massa’? The Mormon Or The Mulatto?
By Myron Pauli

Unless you are hiding in the Unabomber’s Montana shack and consuming rabbits and berries, we all give to and take from the government. However, some give more than they take and some take more than they give.

Just how large is the sector that depends upon government?

Children and the elderly have become virtual wards of the state – so that 50% already falls into the “moocher-hiddeen” (to use an Islamic term!). That leaves the “working age population” of roughly 25 to 65 supporting the rest. Of course, if “Joe the Plumber” has kids or elderly parents, then the government acts as a conduit from him to his extended family. Even addressing just those working age people with neither children nor parents – are they the ones who pay more than they receive? Maybe.

Remove government employees and the government contractors from that. Then you have the governmental corporations such as Fannie Mae and academia who are funded via government largesse. And what to make of GM, Chrysler, the bailed-out-financial sector, etc., kept afloat by government? Public utilities are governmentally regulated monopolies. Automobile Dealers function only thanks to governmentally legislated monopoly. Pharmaceutical firms, publishers, and the entertainment industry function on patents and copyright for their financial status. Sectors in agribusiness, health care, insurance, energy, and transportation (Amtrak!) are so heavily regulated that those employees are de-facto governmental workers even if there is a semblance of profit. The less said about lawyers and lobbyists, the better!

Truly private workers such as waiters, plumbers, and preachers are quite independent of government; but in locations like metropolitan Washington DC, nearly all their customers come out of the “oink sectors.” Even worse is that when Americans invest their money, the Roth’s, IRA’s, 401k’s, 529’s, HSA’s, “cafeteria plans” are so controlled by governmental rules that one wonders who owns the money – you or the government – or is that even a distinction?

The sad and pathetic truth is that we are all living on a large plantation with a quadrennial democratically elected “Massa” and a bureaucracy of overseers. It is to the credit of racial and religious tolerance that we can have a Mormon vs. mulatto fighting for the job of “Massa”.

The fact is that government has entangled itself from cradle to grave like a metastasizing cancer. Rhetorical flourishes aside, the only government programs downsized in the last 40 years was transportation deregulation under Carter and welfare reform under Clinton (nothing eliminated under Republican presidents), and the budget was in near-balance (ignoring raids on the “Social Security Trust Fund!”) by Clinton. I mean, this not as an endorsement of the unabashed big government Obama but merely to point out that the odds of Romney downsizing the Federal Government is smaller than the odds that the Chinese politburo will make Yom Kippur a Chinese holiday!

So when “Tea Party Conservatives” start bitching about Obama endangering their Medicare, it is because the addiction to government is nearly universal. Some of us on the plantation may be more productive than others, but we all live under the rules and, regrettably, most inhabitants (or inmates) generally support the system.

A few libertarian “nutcases” like Paul or Johnson may point the other way, but even most billionaires are as happy to have the Warfare-Welfare state as the poor. Who do you think pays for the TV commercials and the spin doctors and the political “think tanks” – Christian coalminers and Hispanic gardeners, or guys named Koch, Adelson, Soros, and Spielberg?

Nothing short of a major non-violent libertarian revolution” (Constitutional restoration) is needed – but until then, we can all stick our hand out for our share of the public gruel.

******
Barely a Blog (BAB) contributor Myron Pauli grew up in Sunnyside Queens, went off to college in Cleveland and then spent time in a mental institution in Cambridge MA (MIT) with Benjamin Netanyahu (did not know him), and others until he was released with the “hostages” and Jimmy Carter on January 20, 1981, having defended his dissertation in nuclear physics. Most of the time since, he has worked on infrared sensors, mainly at Naval Research Laboratory in Washington DC. He was NOT named after Ron Paul but is distantly related to physicist Wolftgang Pauli; unfortunately, only the “good looks” were handed down and not the brains. He writes assorted song lyrics and essays reflecting his cynicism and classical liberalism. Click on the “BAB’s A List” category to access the Pauli archive.